Analyst friends, good afternoon. I'm Geng Wei, Secretary to the Board of Bank of China. Welcome, my friends, who participate in Bank of China's 2015 Annual Results Conference. I know that everyone has just come by here from another conference, and that you have already had a very hard working day. Please accept my appreciating to everyone that support, encouragement. I believe you will benefit from our conference today. As before, this conference was mainly based in Hong Kong. But in the meantime, have an audio and a video link to our Beijing venue. Right now, the bank's 2015 annual report has already been available on the website of the bank and also the Hong Kong Exchange. You will also access to our websites to obtain the slides presented today.
Other than specific stated, all the financial data introduced today are all prepared according to the IFRS. Next, please allow me to introduce to you the bank leaders. First, President Chen Siqing, our President, and then Mr. Ren Deqi, Executive Vice President, and the Chief Risk Officer, Mr. Pan Yuehan. At today's conference, we first of all would like to invite President Chen to brief you on the bank's development strategy, 2015 annual performance, and then outlook for 2016. Next, we will arrange for a Q&A section, so our analyst friends can raise questions, and then we will reasonably allocate time between Hong Kong and Beijing. Next, let's welcome President Chen.
Media analyst friends from investment banks, good afternoon. First of all, I would like to extend my apology, because of reporters from last press conference raised a little bit more question. So we have to keep everyone wait for a while. Very warmly welcome every old and new friends to attend today's annual results press conference. I'm very glad to meet everyone again. Today, Executive Vice President Ren Deqi, Chief Risk Officer Pan Yuehan, and me will brief you on Bank of China's 2015 results.
Everyone may have already known our EVP, Deqi. He participated quite a number of results roadshow after he joined the bank, but this is still his first time to come to Hong Kong to participate in the results conference. He is in charge of the entire financial market and asset management. So all the profitable business departments are all under his management, so you can communicate with him more. Chief Risk Officer Pan Yuehan, everyone may be the first time to meet him. He served two capacities at the bank.
First, he's a member of the bank's execution commission. Second, he is the Chief Risk Officer. Before he took the position, he previously served in a very important role in Zhejiang, Jiangsu, Suzhou, and Shanghai. He previously was the Deputy General Manager for Jiangsu Branch, General Manager for Suzhou Branch, and later on, General Manager for Shanghai Branch. Shanghai is a financial center. During serving his capacity, the operation results for Shanghai Branch was very good, and the Board of Directors has already appointed him as the Chief Risk Officer. We're still waiting for a few external regulatory procedures to complete. Today let him make his appearance, so that everyone can get to know him. In general, the bank has delivered a satisfactory results for the fiscal year 2015. It realized a stable growth in terms of profits. Asset quality was effectively controlled, and comprehensive strength was further improved.
It didn't come easy in the context of a complex and volatile financial environment. We can tell from the slides that the asset scale has already been improved for the past recent three years. First, I would like to speak to you about the execution of strategies for the recent years. The figures I use are not completely from 2015, but included 2012, 2013, 2014, and 2015, so that you can have a comparison among the four years. As for a bank, you can just not make a judgment as to whether good or not using one year or a few years' performance, but you need to see a continuous stable operation. Bank of China is a bank for over 100 years, and to ensure a prosperous future, we need to go after a stable and sustainable development. Growth isn't everything for development.
Development includes growth management control, market expansion. This is also related to our Chairman Tian Guoli's strategy. In 2013, when Chairman Tian joined the Bank of China, he advanced a strategic goal of serving society and delivering excellence by serving the nations, furthering reform, and opening up. As well as making use of Belt and Road Initiative, the bank fully exerted its competitive edge in internationalization, and also seized the business opportunities in RMB internationalization, interest rate liberalization, and internet finance. In the past three years, under hard work of every employee, the bank's access scale was steadily enhanced with a three-year CAGR of 10% and three years after-tax profit of 77%. Also, the image of the bank was further improved. Among the top 1,000 banks, we ranked number four in 2014. It was upgraded to number four in 2015.
Among the Forbes Global 2000 top companies, we ranked number four in 2015. We ranked number nine in 2014. Also, we were in consecutive five years enrolled as a global systemically important bank. As a global systemically important bank, it actually means a lot of pleasure to us, but also it's a signal for our management. It requires us to further improve our risk management, organizational structure, innovation, business structure, management of business structure complexity. Generally speaking, Bank of China's market position was also greatly improved. The bank's strategic competitive edge has preliminarily appeared. Internationalization has always been the hallmark of Bank of China. In the long term, regardless of change of market environment, the bank has always stuck to its direction of internationalization with utmost determination and perseverance.
In the new stage of the nation's overall opening up, in the past three years, we further improved the bank's internationalization. In the past three years, the bank's overseas access rose 54% than in 2012. From the year 2012, its overseas before tax profits was continuously improved, which represent 23.64% of the group's before-tax profit. Because of a different level as for after-tax profit, its after-tax profits represent 27%. Right now, currently, Bank of China's overseas assets represent 27%. We have a dream that we can, in the long term, a very short time, to reach to 30%, plus appreciation of U.S. dollars is comparatively favorable to the bank. So that, 30% is our short-term goal, and our future goal is 40%. That's why we need perseverance to reach that. Right now, our overseas NPL ratio was relatively low.
Currently, the group's NPL ratio was 1.43%, and the overseas was 0.7%. Also, among the 20 approved overseas clearing banks by PBOC, we roughly represent half, and a number of majors for the Bank, like Hong Kong, Macau, Taiwan, Paris, and Frankfurt. We also increased a number last year. Also, in the process of interest rate liberalization, because we had competitive edge in the proportion of our overseas access and diversified platform, plus the U.S. dollars appreciation, is helpful to improve the return on the Bank's overseas access. So in the past three years, we made a comparison that our NIM is in contraction, and the extent of contraction is the smallest among peers. Also, the proportion for our non-interest income is also the highest. It was 30.65% in 2015. We hope that this proportion can grow bigger.
Among the international advanced measures, 30.65% cannot be counted as high, but we will be seeking for a higher aim. Also, the Bank, in recent years, has devoted a lot to push its information technology construction and Internet Plus finance development. I will bring a good news to everyone, that under our continuous hard working, we have already completed IT blueprint globally. Currently, other than one country, we have already realized a 7x24 hours information technology connection globally. Currently, we are implementing on the action plan of Internet Plus. We used three years to build up and realize a new Bank of China, not relying on the expansion of outlets and staff increase and investment of excess allocation, but rather through internet finance, capital-light, such a transformation, to speed up construction of a financial service mode adapting to the future trend.
Currently, global economy is in a long run of recovery. The Chinese economy is also at the new normal stage. First, is the economy growth is slowing down. Second is speeding up of the adjustment of the structure. The third is the market force is shifting. The nation is pushing forward the supply-side structural reform. Requires the over capacity, deleverage, destocking, cost reduction, and the points of strength of witness strengthening. Also, at the same time, the nation is pushing forwards another round of higher level opening up, and financial reform is continuously speeding up. The 13th Five-Year Plan regulatory system is reconstructing. Internet finance is flourishing. So in the future, bank industry will meet even bigger challenges as well as opportunities.
In the process of transformation, it is the time to see whether bankers have the ability to manage the transformation, to lead the transformation, and to realize capital growth and development. So Bank of China, an over 100-year history bank, needs innovation to maintain its prosperity. A history of Bank of China is a history of financial innovation. So faced a new situation and task, the fundamental drive is to adopt innovative thinking to resolve issues of new era. So in the future development process, we mainly do the following three things. The first, proactively adapting to the development trend of RMB internationalization to strengthen business and product innovation to solid our leading advantages. The RMB international started from July of 2009, and it's been seven years currently.
During the seven years, we should say that in the first six years, starting from July of 2009 to August 11 of 2015, this is a period. During this period, RMB's promotions mainly started from trade, from the regular account, and slowly moved to capital. But the condition is that it was promoted during the process of RMB appreciation. But after August 11, RMB international, it has become argumentative. That is, whether RMB depreciation is helpful to internationalization, whether RMB exchange rate fluctuation is helpful to internationalization. I personally feel that RMB internationalization may have rhythmic adjustments, but the direction would not change. China, to have its presence in the world economy, it cannot rely only on the second place in terms of GDP, but rather on RMB internationalization to finally play a role in the global financial system.
I feel that in last year's RMB internationalization, it has a speeding part, like inclusion into the international currency reserve currency basket, and also has a slowing part, because we have exchange rates reform. But commercial banks need to adapt to RMB international as new normal. What is new normal? RMB exchange rate appreciated. When RMB exchange rate appreciate, you need to realize internationalization. You need to have a competitive edge in that. At the time of RMB depreciation, you need to have the ability to manage RMB internationalization. At the time of RMB exchange rate fluctuation, you need to play a role in RMB internationalization. U.S. dollar is not always at the process of appreciation, but rather it appreciates and depreciates at a will. At the time of decreased interest, it is quantitative. At the time of increased interest, the capital offload there.
China should equip itself with such ability in the future. Commercial banks also need to And pushing the international management at the time of RMB exchange rates fluctuation. This is what we are working for in the future, and we have already accumulated some experience. We could say that in terms of RMB internationalization, Bank of China, first, has a predominant position. Second, Bank of China has the innovative spirit to continue to lead the competitive edge. And third, in the future, in the complicated capital market and exchange markets, the bank will continue to lead the competitive edge, and we believe we have the self-confidence. About construction of Belt and Road financial artery. Bank of China is an internationalized bank, which has 634 institutions overseas, covering 46 countries and regions, and has a very predominant edge in Hong Kong, Macau, and Taiwan.
Currently, out of 64 Belt and Road countries, we have set up institutions in 18 countries, and we will continue to build more this year and next year. Bank of China's international accord with Belt and Road policies, which generates a superposition effect. On one hand, we closely follow up the international strategy. On the other hand, we realize internationalization to solid our development foundation. We do not hope for a slowing down Chinese economy, but Chinese economy, after a high-speed growth, will turn into a mid-high growth. And then in the process of transition, conflicts will surely arise, including a slowing down of the bank's profit growth. But since the distribution of business customers, institutions, as well as the global networks, internationals development actually offset this risk. In terms of internet finance, we not only stick to internet finance, but also e-banking to improve our traditional commercial mode.
We don't fight with big banks in terms of institutions. Among the four big banks, some have 20,000 institutions, some have 16,000 and 17,000 institutions. We have 10,000 institutions domestically. We mainly adjusted our structures to upgrade our smart outlets. We developed online banking, mobile banking to integrate internet finance, so we could use our channel like capital and lead access to get more closely to market. This is our future development trend. This is the first issue I brief you on. The second one is about some figures about 2015. Currently, actually, it's already available on the website. Everyone is very familiar with the figures. Actually, I will just tell you some major ones. The first one is that the after-tax profit in 2015 grew 1.25%. In terms of growth rate, it's comparatively fast among big banks.
But in terms of total volume, it's not the most. Also, the assets, liability, and equity grew relatively steadily. Assets rose 10.3%, liability rose 9.9%, and equity attributable to shareholders grew 14.4%. The provision to non-performing loans meets regulatory minimum. The provision to loans was 2.62%, and the provision coverage ratio was 153%, moderately above the regulatory minimum. Currently, the domestic financial sector calls for the adjustment of regulatory provision coverage ratio. We have that in mind, that we are not seriously looking forward to it. Instead, we will develop our business under the current regulatory standard. In addition, our capital comprehensive strength was further improved. CAR , and the Tier 1 CAR was respectively increased by 19 basis points and 49 basis points. In the meantime, liability structure of assets was optimized. Firstly, loans to clients grew healthily at a ratio of 7.7%.
We noticed there were two growth. One is the growth of small and medium-sized enterprise, which met the CBRC's three medium requirements. The second one is the growth of personal loan at a ratio of 13.5%. The whole Chinese economy's driving force is shifting. In the past, it was export, investment, and consumption. Export investment is more related to corporate business. Now, consumption is more related to personal financial business. So increase more investment on personal financial business. We have a domestic strategy named Three Fifties. Bank of China does not have a high proportion of personal business. So we'll use a shorter time to increase the domestic personal business.
As for the overseas, we still focus more on corporate business because it's not easy to do the corporate. The environment is not that good for developing the personal business, especially under the AML and compliance pressure, and the regulatory standard is relatively higher. Another one is the high-speed growth of investment. We slowed down the growth rate of the loans in a more comprehensive way, to increase investment to reach the CNY 3.6 trillion. Currently, the NIM was 2.12%. So we definitely need to make something out of liability. We can't make something out of assets because to support the real economy, it's not possible to increase interest. The nation has carried out five interest cuts, so we need to work harder to reduce liability cost to maintain the NIM at a controllable level. Also, the bank's profit structure was continuously optimized.
Progress has been made, while stability was ensured in terms of operating income. Non-interest income rose 7.4%, representing 30.65%. The NIM continuously in contraction, but the smallest among majors. Cost was effectively controlled. The cost-to-income ratio was at 28.30%. We cannot reduce the normal investment. Some normal investment should be allowed, especially in the slowing down economy period. Some fundamental investment should be allowed, otherwise, we cannot achieve a sustainable development. So the 28.30% level actually is not met. The Western banks can even not reach to this level, because our staff cost is relatively low. But the future pressure is increasing. At the same time, risk management was also strengthened in the last year. Among the big eight risk management, we take overall risk management. We have employed a Chief Risk Officer.
In terms of our comprehensive risk management, currently, we pay the most attention to the following two types of risks. One is the compliance risk and AML risk. This is the base work for commercial banks, and we need to work hard to strengthen among the institutions in the world. We can say that if we set up institute in a very stringent regulatory environment, if we set up institutions, and although it should be profitable, if we are doing a bad job in compliance, then actually, it could be very risky. So, we actually work very hard to solid our compliance operation and AML foundation to strengthen the procedure control. For example, I understand that our analysts are focused on the intermediary business. But in a case like remittance, remitting business, if we remit bad guys money to another place, it is not a normal remittance.
It's actually a money laundering. So, it's only one paper difference between remittance and money laundering. You got to know your customer, know your customer's business. So in the past, we believe only overseas institutions used to focus on the AML work, but it's not the case anymore. If they remit money to the domestic bank, it's going to be problems too. So in the future, we will increase our efforts to manage our compliance risk and AML risks. The second one is to resolve credit risks, especially non-performing loans. Non-performing loans arise during the slowing economy period, but we need to note that non-performing loans are not necessarily toxic assets. Non-performing loans are structural. Some of them are reversible. So the bank need to uphold a principle or a concept of managing non-performing assets to resolve non-performing assets. We need to note the centralization, marketization, and professionalism.
We not only simply collect, we also worked with our customers to build on and then propose an overall solution to non-performing assets. It proved quite okay. In 2015, we resolved quite a number of non-performing assets, and the effect is very good. As for the three big major risks that the market attracts most attention from the market, we actually had a very good effect controlling. The balance of loans to overcapacity industry was CNY 163.4 billion with a NPL ratio of 0.31%. Not all the overcapacity industries is redundant. Some of them are needed by the nation. The loans that were extended to the overcapacities industry are all big and leading corporates. Local government financial vehicle, we did a lot of work to resolve. We used the local bonds issued by the nation to swap the local finance vehicle loan to raise the risk.
Also, we extended loans to the real estate big corporates. Every member of the senior management of the Bank are responsible for resolving of the non-performing assets. Every vice president is responsible for two of the domestic bank that has non-performing assets, and they need to have meetings every month, which forms their high-pressure status to resolve non-performing assets. All this proved to be very successful. Also, the Bank's international business was greatly expanded. I won't talk about the details here. For example, last year, we set up five more overseas institutions, three of them along Belt and Road. To construct Belt and Road financial artery, we not only simply set up projects, we should also seek for projects. These projects and the nation's strategies are closely connected. We've actually extended $28.6 billion, followed up 330 major projects.
While we expanded Belt and Road business, we combined with risk management. We greatly supported going abroad enterprises, accumulated provided service to projects, 2,200 projects, with a loan commitment of CNY 148.6 billion. At the same time, we set up a matchmaking platform for Small and Medium-Sized Enterprises, let China's Small and Medium-Sized Enterprises going abroad, and let the overseas good quality Small and Medium-Sized Enterprises come to China for market. It all proved very successful. We also lead in RMB internationalization. Cross-border RMB settlement reached CNY 5.4 trillion. Cross-border RMB clearing volume reached CNY 331 trillion, continuing to maintain number one among global measures. In terms of RMB internationalization, we currently are not satisfied simply with trade settlement and clearing.
We will completely screen all the high-frequency exchange house from the global factor market to establish one-to-one strategic partnership association to introduce our products into their exchange house and vice versa to enable us to conduct high-end business. The cooperation with Exchange House enable Bank of China to have a batch of high-end customers. We are planning to be banks to banks and customer to customer to form a relatively good business framework, also enable Bank of China, that after the complete liberalization of the capital market, that we could continue to lead RMB internationalization. We also launched some RMB Internationalization Index. The six platforms at Shanghai Free Trade Zone proved to be very effective. Before the complete liberalization of China's capital market, we make monies through our Shanghai Free Trade Zone.
When Free Trade Zone was expanded to Fujian, Tianjin, and Guangdong, we continued to copy this mode, then it's going to be a little bit difficult for other banks to catch up with us. The Bank's competitive edge in its diversified business was further exploited. BOCI not only leads among Chinese investment, it also has already cooperated with Goldman Sachs, Morgan Stanley. Of course, certainly they have some competition. BOCG Securities, we have two licenses. Domestic A-shares use BOC Securities as a channel. Hong Kong shares and overseas use BOCI. In the future, we'll form a network system for investment banks through integration. It's going to be of potentiality. For insurance section, currently, we have six insurance companies. We have property insurance and life insurance domestically. We also have a property insurance and life insurance in Hong Kong and Macau, and in the future, we'll further integrate it.
BOC Aviation is right now in the process of listing. Since in 2006, after we purchased Singapore Aircraft Leasing, we made renovation on it. On March 4th, we have already submitted the A1 application form. Next step, we will operate as a capital market to gain return on the investment. We should state our diversified platform is profitable, and it has already increased profit contribution to the group. BOCG Investment is an asset management company, and a direct investment company as well, including direct investment, equity investment, non-performing assets investment, and property management. The integration operation proved to be very effective. Chairman Tian said, "Consider them as tools in the toolbox, so that they can be used whenever we need them." This sounds a very good outlook to us. Also, the bank has made comprehensive upgrades on internet finance business.
Generally speaking, BOC includes one e-banking, majorly resolving the global channel issue, developed mobile banking, online banking, smart outlets, and WeChat banking. Another is the internet finance, majorly to build up three platforms for product lines and for characteristic scenarios, which has already generated effects. This what we did in 2015. In 2016, the bank will continue to adhere to the chairman's strategy of serving society and delivering excellence. In 2016, the operation situation and environment will be severe and challenging. Based on the 2015 after-tax profit of CNY 180 billion, we made a preliminary calculation that a bank like Bank of China, for one year, it needs to make an operating income of CNY 500 billion, and before-tax profit of CNY 300 billion, and after-tax profit of CNY 180 billion. This is a very big challenge.
According to our preliminary calculation, every day of the full year, including Sunday and holiday, we need to make a daily profit of CNY 5,000 million to achieve our goal, but we have confidence. We will specifically do four things in 2016. The first is to innovate, to develop. The second is transform, to seek for efficiency. The third is to mitigate, to control risk. The fourth is to control and manage to enhance the joint force. We are making efforts to gain a stable growth of performance for 2016 based on the 2015 level.
I do believe that you must have a lot of questions to ask our management. Now, we are going to start the Q&A session. Mr. Chen and Mr. Ren and Pan are all here, so I look forward to your many questions so that they can respond to you. If you want to ask a question, please raise your hand, announce your name and affiliation before you ask your question. We begin with our analysts here in Hong Kong. This lady, the lady who is closest to me.
Thank you. I am Lucy from UBS. You talked about RMB internationalization. That is very inspiring, because I thought it can only be done easily when it appreciates. But you said that it doesn't matter when it's fluctuating or depreciating. It seems that RMB going abroad can be done. I would like to ask you, when the exchange rate is fluctuating, BOC can make use of the opportunities, especially with Belt and Road strategy. What type of business will be presented when the exchange rate is fluctuating? Is it a loan business or a capital preserving business, and who will be your target industries and clients, and what is the overall level of return? A small question, what about 2016? What is your loan plan?
There are many questions here. That is one article. How about this? RMB internationalization and Belt and Road, and then about loan investment, right? I will take the last part.
Thank you for your question. Just now, we talked about how Bank of China, in the context of RMB exchange rate fluctuation, to further speed up its promotion of RMB international business and develop our competitive edge. President Chen just now also said that in the future, for the future trends for RMB exchange rate, especially after last year's August 11 exchange reform, the whole direction is to bring the market factor into play. There will be fluctuations from several directions. Since it is the market orientation, it should fluctuate centering on the actual value. This year's Belt and Road business development key points included institutions and the network resources expansion, and also they all center on the new emerging market. Among the new emerging market, actually, we will see that the RMB is appreciating.
For example, at the end of 2005, the RMB against U.S. dollars depreciated at a ratio of 5.77%, but the RMB exchange rate, that is at the end of last year, was 100.94, up by 0.94%. According to the Bank for International Settlements, BIS basket RMB exchange index, last year also rose 1.71%. Last year, for the Belt and Road, we provided an actual credit extension of $28.6 billion, and the currencies mix allocation risk mainly was through the PBOC's pushing arrangement for the promoting of RMB currency swap scheme. Also, to follow up the project-based country and investors on both sides to prevent the risks. In the whole process, Bank of China's competitive edge in trades should be brought into full play, and this is one point.
When we propel forward the project, we rely on marketized operations within a controllable risk. We will continue to support our loan business, and our market share continues to be one of the best.
Third, as for the trade business area we talked, since last year's August 11, everyone could see that in the process of the further pushing forward of RMB internationalization, one of the important thing is about the diversification of the participants in the foreign exchange market, and also a further deepening of the entire bond capital market. Currently, according to the central bank's policy, the foreign central bank sovereign qualified institution could participate into the interbank foreign exchange market and bond market. These type of transactions could be conducted directly, but most of them are still through agency. In terms of global network expansion and then customer localized, Bank of China could fully bring into play its competitive edge, and also it should have bigger room to expand in this area.
We have been supporting early-phasing enterprises, and we have leveraged on low-cost capital for three consecutive years. Our market share for debt financing, we are the market leader. Last year, in the Euro market, we also ranked number one. Our market share reached one-sixth. Now, things have turned around. The onshore market, in recent years, we have been doing a lot of work, and therefore we are the forerunners as well. If you look at commercial banks, commercial enterprises, we have launched initiatives to the extent that it's not threatened by other players. We will continue to work around the fluctuating exchange rate. So when the exchange rate fluctuates, we'll continue to move forward with internationalization.
A good commercial bank.
However much the exchange rate fluctuates, we'll find opportunities to develop. I'm going to talk about where the loans are going to go. Of course, we have our own balance sheet plans. For instance, how much assets do we want to grow, and how much more lending we want to do, and how much deposits we want to attract? These are the plans for 2016. But before we have the report for 2016, it's not convenient for me to give you the details, but there are several things I can share with you. First, we are going to surely increase lending, because we want to support the real economy, which in China at the moment has to find two solutions. First, the cost of financing, and second, the sources of financing. Deleveraging was to be done, but deleveraging does not mean that we are not going to have any leverage.
We must have loans, but the cost should be controlled, and we must find solution to reduce the cost.
In the meanwhile, it depends on the funding capability. Since we need to increase liability and to make good arrangements for the capital adequacy ratio as well, Bank of China is not preferring to greatly increase loan. Loan increasing based on a combination of stocking and increment, based on a combination of the increase of the increment and the structural adjustments, so that it could support the real economy and optimize the bank's balance sheet as well. For example, last year, the loan increased CNY 620 billion with a growth rate of 7.7%. But actually, we have a credited foundation of CNY 9 trillion . This is a very big stocking, and the call to activate it's to manage the flow of the loans, by managing well the flow of the loans to combine the stocking and the increment.
Secondly, we support real economy, not just by lending money, but also by helping them to raise funds. We have a very excellent team to help corporations issue bonds. There's a lot to be done here. We could help corporations to use the capital market. We have an investment banking function at BOC. We can help them to launch IPO. We could help them to raise funds in Shanghai, and if not possible, we can come to Hong Kong or even overseas markets. We also want to change our own business model. We want to have a so-called capital-light model. What is to be emphasized is the development of intermediary operations and the revitalization of our stock. We could try to reduce the ratio of interest income in the total revenues of the bank.
We can increase fixed rate loans, so we can also increase our loans to SMEs. I hope I've answered your question.
What was the third part of your question? Oh, right, the One Belt One Road. Do you still want to ask that question?
After all, interest rate of loans is still higher than bond yield. Is there any case that all of a sudden the demand for bond issuance increased dramatically from the enterprise side?
Many companies want to issue bonds, but it doesn't mean that everybody can do it. They must qualify. There's a balance we must reach. Many companies want to issue bonds, but whether they will be able to do it, we can underwrite them.
Do you have investors to buy your bonds?
That's another story. The corporations must qualify to get into the bond market and the capital market to raise funds by issuing bonds.
Thank you very much for your questions. I think you asked a lot of questions for the Hong Kong analysts. Now I'd like to hand over to the Beijing venue.
Thank you. BOC, I would like to talk about supply-side reform as the backdrop. I would like to ask you about the trend for the quality of your asset. Any improvement trends? Any risk control measures will be taken?
Asset quality for 2016 is an area of concern for us, because it has direct impact on our profit. In fact, if we look at the slow global economy recovery and downward pressure on the domestic front, asset quality is still rather tough issue. To BOC, in terms of asset quality compared to our peers, we still have some strength. For example, non-performing asset, balance CNY 130.9 billion. NPL ratio, 1.43%. The increase is the lowest among our peers. We achieved this result because of a number of reasons.
First of all, BOC loan structure compared to our peers is a bit different, because overseas credit takes up about less than 30%. Secondly, about 30% of our loans going to personal loans. NPL rate is 0.17% only. Also very low. That is balancing out some of the factors. More importantly, in the past two years, especially last year, in terms of NPL or non-performing asset, we have done a lot of disposal. As we have said, our mindset has been directed towards non-performing asset. We have adopted different measures to resolve the issue. Last year, we've done cash recovery. We've done restructuring. We have writing off. We have handled CNY 104.4 billion. We have recovered CNY 37 billion, which is the highest level among our peers. Onshore non-performing asset have, under the leadership of our bank, done different recovery work.
We are covering three major provinces, and every month we will have supervision work on major non-performing asset and targeted projects. We have achieved very good results last year. Thirdly, we have enhanced overall risk management. We have assessed risk for different clients. For example, vetting work has been enhanced, so all sorts of loans, including a wealth management type, onshore, offshore, on the books and off the books, everything is covered. For these clients, we have enhanced risk expectation. Last year, for enterprises or industries or clients who do not meet our standards, we have exited more than CNY 100 billion. A lot of non-performing assets were sprouting, or they were emerging, and we have made very good progress. With this multi-pronged approach, overall non-performing asset has been suppressed at a rather good level.
If you look at the provision to loan ratio, it is also very positive and healthy. Our asset quality provides a lot of confidence to us. But we face a lot of pressure this year. We have to focus on comprehensive risk management system, enhance anticipation of risk prediction, and also exit strategies. For banks, if early on we can have good judgment on risk, and through committed exit, can we digest some of this non-performing asset. These will be important areas of work this year. Secondly, we have to resolve the problem through our diversified platform and marketized means.
Some new policies are about to be launched to help to resolve non-performing asset this year. We will be able to resolve a great amount of non-performing asset compared to last year. Thirdly, we have to manage risk early on. We have to target some important clients. We have to track the performance, restructure, and optimize over capacity. Clients list has to be rationalized so that we can do better and more detailed risk management work. We have this very good experience, and we will continue on, and I trust that in 2016, the overall asset quality will be maintained at a stable level. Thank you.
Thank you very much, Mr. Pan. Now I will give the floor to one more question from Beijing.
Hello, I am Yan Ling from BOC International. Just now we heard you present the NIM level, the narrowing of NIM in 2015, which is a very good performance even though the economy was slowing down. What is your prospect for 2016? What are some approaches that you are going to adopt to deal with the pressure from the narrowing of NIM?
You are from my own bank, right? I am going to take up the question. In fact, NIM is the most frustrating thing that we are dealing with. 70% of our income comes from this margin, and therefore, if NIM can be higher, then it will be very good for our bank. In internal analysis, there are two things I am worried about. One is bad loans.
If that rate goes over to 2%, then I am worried. The second 2% that I worry about is if the net interest margin goes down below 2%. Now we have 1.43%. Of course, we also have SML. When SML goes down, then we are going to have a lower NIM. We are going to make concerted efforts to deal with the bad loans. That is one thing we need to deal with. The other thing we must focus on is the net interest margin. This is very easy. It is easier to solve. Of course, I cannot publish the NIM for the first quarter, but I tell you that NIM is a huge pressure for us. The trend of an upward NIM is difficult to reverse at the moment because RMB is actually in the cycle of lowering interest rate.
Lending rate is going down, but deposit interest rate can go up. In the market competition, if you want to stabilize NIM, it is going to be quite difficult. As you know that in the international market, NIM is also fluctuating. We have to work more on stabilizing NIM. I think there are three things we can do. First, pricing of lending must be based on risks. We have to support the real economy, and support the corporations. I want to control my risks. Loan pricing is an item of focus for us.
Second, we must control our liability and cost. There are a few things that Bank of China should do to control liability and cost. First is to expand its fundamental account business. Compared with ICBC, CCB Bank of China has less customers opening fundamental accounts. We should, by ways of opening more fundamental accounts to keep our check customers, and also through our payroll business to keep our corporate customers, and then to enable an increase of low interest and zero interest fund. Besides, we also should work hard on obtaining stable deposit from administrative institutions, and strengthen active management on liability.
In the meantime, we also should adopt the global financial angle to plan for the whole bank internet network. We have two very good products which are much better than peers. One of them is the Global Cash Management. Under the support of the IT blueprint system, we make use of the global IT network through a one-on-one customized service to attract global well-known corporates, like General Electric, to choose Bank of China as their global cash manager.
Last year, we have, under our management, CNY 500 billion. In Asia Pacific, we are number two in cash management, only second to a very large foreign bank. Of course, there's still quite a way to go before I catch up with number one, but we are doing quite well. By doing that, we can expand our fund sources to include a lot of low or no interest funds. We have also chanced on a very good opportunity, and that is the hike of interest rates of U.S. dollars. We have 30% of our assets which are overseas. Most of them are denominated in U.S. dollars. When the dollar goes up in interest rate, if we can control our cost, then our lending overseas can help us with our profitability.
We have to increase our assets overseas, and then when the U.S. dollar interest rate goes up, then we'll have a very good chance of stabilizing the NIM. Of course, if NIM goes down, then BOC's NIM's decrease will be slower than that of other banks.
Now we shift back to Hong Kong. We'll have several questions reserved for our analysts here. The gentleman in the third row, please.
I'm Linan. Good afternoon. I would like to talk about overseas business. In May last year, we announced restructuring your business and some divestment. You didn't disclose too many details back then. A year has passed. Concerning ASEAN business restructuring, what is the latest progress? What is the future strategic positioning? At the headquarter of BOC and BOCHK, what is the difference of international positioning in the future?
Thank you, Linan. I will ask my colleague to respond.
Thank you for your question. Last year, in May, we announced BOC Hong Kong is going to transfer some of our branches in ASEAN district. We have been propelling forward all such restructuring projects, including asset assessment, due diligence, supervision, and communication. Some institutions have already been reported to the authority for approval. This transaction is rather complex, and we need the approval from CBRC, Ministry of Finance, Hong Kong MA, and also the authorities in ASEAN countries. It takes time to complete this process. We will do it step by step. Concerning the rest of the progress, we will make disclosure at the opportune times. You talked about the strategic layout in ASEAN district. Previously, we have already looked at the overseas segment and also BOC network in ASEAN area. Our core is to work alongside high level of opening up measures and RMB internationalization.
We will continue to be a major force, and we would continue to take the market lead. In ASEAN area, our consideration is that we have to connect the Pearl River Delta region because ASEAN countries have very close ties in terms of the culture and the people. If we go abroad, we can first choose ASEAN countries. Hong Kong is one of the major clearing destination for offshore RMB business for BOC Hong Kong. Our major consideration, we are going to reintegrate such business into BOC Hong Kong , and at the same time, we will leverage on the capital strength, innovative capability, and RMB service capability at BOC Hong Kong so that we can achieve synergy with ASEAN countries, so that we can enter the ASEAN mainstream market. In this process, in terms of propelling forward our business and achieving synergy, we already see some results.
This year, we believe that in the entire ASEAN region, we will be able to further support our going abroad measures and Belt and Road Initiative. We are already getting a lot of improvement. That is the progress. Thank you.
Thank you. We will now allow two more questions.
Thank you very much for giving me the opportunity. I am Katherine from JPMorgan. I have a question on asset quality. A question which is of concern to analysts and investors. In reform process, we are talking about overcapacity and cutting down the capacity. Is that going to have an impact on asset quality?
Thank you very much for your question. Of course, dealing with overcapacity is a very important issue for the banks. This is not a new issue, because the national government has always been talking about restructuring, under control, and reduction of overcapacity. In the past few years, BOC has been very careful in terms of lending to the sectors with overcapacity. Also, the bank implemented categoric policies on different industries, and by ways of adjustment of the customer structure and adjustment of the product structure to mitigate risks. Here I will provide you some data. Currently, Bank of China's credit balance in the five industries of steel, cement, aluminum, shipbuilding, and flat glass was CNY 163.4 billion, representing 3.41% of the domestic corporate loans, with an NPL ratio of 0.31%. The NPL ratio for this area actually is very low.
The second big section that everyone is more concerned is the coal. The bank's loan balance for the coal industry was CNY 154.4 billion, representing 3.22% of domestic loans, with an NPL ratio of 0.94%. This data shows that in all the overcapacity industries, the proportion of the bank's credit loan to the entire loan, and its corresponding NPL ratio was relatively low. Also, the over CNY 300 billion loan was mainly extended to the leading and the big sized good quality corporates in the industry. So the asset quality as a whole is controllable. Third, some corporations are operating within the framework of One Belt One Road, and can engage in cross-border cooperation. We will continue to support them as well. So these are the three measures we are going to take. We are also going to control the risks according to each sector of the economy.
We hope that those overcapacity sectors can go down in terms of their ratio in our overall loans. We are very confident that we will be able to deal with the situation. Thank you very much.
The last question is going to be for this gentleman in the third row.
I am from Citibank. My name is Simon. I would like to ask about BOC payout ratio was lowered to 33% last year, from 35%, and further down to 30%. Why? Is it because of pressure on profitability? Are you going to consider further lower the payout ratio? I would like to ask you, what is the payout ratio for Citibank?
Not that high. Not high at all.
Compared to us?
Lower than you. You shouldn't ask that question then. You should pass the question to someone with a higher payout ratio. All right, I will take the question. Very simple. First, payout policy is stable, subject to dynamic adjustments. 2013, it was 35%. 2014, 33%. 2015 30%. Basically, not lower than 30%, so basically stable. But it is subject to adjustment.
Why?
Banks, in terms of high or low profit, it is not related, it is not relevant.
It is about capital adequacy ratio. If a capital market is very mature and sophisticated, we are able to issue or allot our shares, then our payout ratio can be higher. But our capital market is still being improved. If we need to increase our level of issuance, then that will create big impacts. We need to ensure our CAR level, so we need to have more options so that when the economy is turning downward, whatever the profit level, we have to consider how we can make our capital adequacy level is higher. When do we adjust it for upward? When the capital market in terms of replenishment capability is enhanced, it will go up. Secondly, our payout ratio is not low. Because our market, our stock price is very low. We have dividend payout according to every share.
If we pay out according to the stock price, it is actually very high. You are analysts, I understand. You have many clients, maybe fund managers. They are all buying Bank of China shares. We have issued the shares, and you are sharing our fruits. Our shares are valuable. You can buy them. You can buy a lot, and when the price comes up, gradually, I will be able to allot more shares. So, we will be able to increase the payout ratio then. So you should pass this question to a different person next time.
Thirdly, 30% among our peers is still the high level. I can tell you right now, other than Big Four, we are talking about around 24% payout ratio, 26% if we include Big Four. We are at 30%, still a higher level. We will maintain this level for some time, subject to dynamic adjustments. What will happen next year, we will have to decide according to the actual situation. Dear analysts, I can say this, right? I can say this, right? I hope. Please keep good relations with fund managers, because we can bring them more benefits as well.
Thank you very much, members of the management. Because of time constraints, we are not able to take all your questions here. Our apologies. If you have any other questions, please contact our investor relations team. Thank you very much. Sorry for the delay. Thank you very much