Ladies and gentlemen, good afternoon. Welcome all of you to attend today's results announcement. This is my first time to meet you all as the President of the Bank of China. We treasure this opportunity very much. We would like to establish and maintain a very good communication with all of you. The development of the Bank of China has witnessed from you, our friends long time support and help. Now allow me on behalf of my colleagues and myself to express my sincere gratitude to all of you and hope you can continue to take care and support the Bank of China in the future. Last year, Chairman Tian Guoli proposed that the Bank of China should take social responsibility in a bid to be an excellent bank. This is our strategic goal.
We need to shoulder significant responsibility for the nation's revival, possess its competitive edges in the globalization process, and also lead lifestyle changes in technological innovations, earn customer loyalty in market competition, and also meet the expectations of shareholders, employees, and society in all in the course of its sustained development. To realize this strategic goal, the Bank will focus on business development and continuously tighten risk management with regular results. In 2013, led by Chairman Tian Guoli and former President Li Lihui, the Bank shouldered social responsibilities, integrated its development with national strategy, and delivered excellent results in a complicated operational environment. The Bank recorded a profit after tax of RMB 163.7 billion and profit attributable to equity holders of RMB 156.9 billion, increased by 12.35% and 12.36% year-on-year respectively. The Bank's net interest margin continuously expanded. Non-interest income ratio continued to lead peers in its proportion.
Profit before provision grew 13.9% year-on-year. Asset quality remained stable with sufficient provision. NPL ratio stood at 0.96% with NPL coverage ratio at 229%. The ratio of provision to total loans of domestic institutions kept flat at 2.62% compared to the prior year end. The Bank further improved management mechanism and performance appraisal methods efficiently stimulated institutions of different levels to realize balanced development, push forward growth in core deposits, and optimize asset liability structure. The Bank's customer deposits grew by RMB 923.8 billion, or 10.1% compared with the prior year end, and proportion to total liabilities increased by 7.58 percentage points. Domestic RMB denominated customer deposits grew by RMB 703.6 billion, or 10% from the end of last year. Deposit structure was further optimized.
Daily average balance of domestic RMB denominated demand deposits grew by 9.9%, and the proportion of daily average balance of domestic RMB denominated customer deposits increased by 2.4 percentage points from last year. By effectively and continuously reducing high cost liabilities, average cost of domestic RMB and foreign exchange denominated customer deposits dropped by 18 and 35 basis points respectively compared with last year. The Bank continues to optimize its asset structure, increase the proportion of high-yield assets. The Bank accelerates the transformation of its financial services to large enterprises and strengthen credit support to the SMEs and individual customers so as to meet the demand of the real economy. Stable growth of its loan portfolio was maintained. The Bank's loans and advances to customers grew by RMB 743.1 billion, an increase of 10.8% compared with the prior year end. The proportion to total assets further increased.
The domestic RMB denominated loans grew by RMB 584.5 billion, an increase of 9.6% compared with the prior year end, and grew faster than corporate loans. Domestic RMB denominated personal loans increased 15.3% from the end of last year, and the proportion to domestic RMB denominated loans has been increased to 33.6%. Small-medium-sized enterprise loans achieved fast growth. Small enterprise loans by BOC Credit Factory grew by 32%. Domestic medium-sized enterprise loans grew by 18.2%. [Non-English content ]
As the most internationalized commercial bank in Chinese Mainland, the Bank has led the RMB offshore market development, became the primary channel of RMB cross-border circulation, main driver of RMB internationalization, and also the main leader in RMB internationalization products and service innovation. In 2013, the Bank's cross-border RMB settlement volume was over RMB 3.98 trillion, achieving a year-on-year growth of 60.2%, and continues to maintain leading market share. Since China launched our RMB cross-border settlement scheme, the Bank has completed cross-border RMB settlement volume over RMB 8.6 trillion. The Bank's 1RMB global clearing network has taken shape. Apart from Hong Kong, Macau and Taiwan, the Bank is also the RMB clearing bank in Malaysia, Luxembourg, Cambodia, Philippines, and became the main RMB clearing channel in countries such as U.K., Germany, France, Japan, South Korea, Indonesia, and South Africa.
[ Non-English content] In the second half of 2013, the Bank of China-
Meanwhile, the Bank carried out a full range of product innovation, simplifying the cross-border RMB settlement procedures to facilitate enterprises cross-border trade and settlement, and investment. The Bank also actively participated in pilot businesses in Shanghai Free Trade Zone, provided cross-border RMB financing solutions for Hong Kong-Zhuhai-Macau coverage, successfully issued the first series of RMB Formosa bonds, and our bond issuance of RMB 2.5 billion of our London branch was successfully listed on the London Stock Exchange, breaking the record amount for single debt issuance in London, and also became the first RMB bond of Chinese banks to be listed on the LSE. The Bank accelerated the development of non-banking businesses, including investment banking, fund management, insurance, direct investment, and investment management and aircraft leasing business. We promote cross-selling product innovation to enhance the synergy across the groups, and provide comprehensive and quality financial services to the clients.
In 2013, the contributions from our non-banking business further increased. The bank's comprehensive business income stood at RMB 52.7 billion, a year-on-year increase of 24.8%, and accounting for 12.9% of the bank's total operating income, up by 1.4 percentage points. We have fully leveraged on our advantages of integrated domestic and overseas business, and also our diversified business platforms. We enhanced our business negotiation ability and successfully organized multiple large cross-border products through strengthening our domestic and overseas business coordination. Our comprehensive global service capability was further improved. As a lead bank, in the year of 2013, we have played key roles in WH Group's $7.1 billion acquisition of Smithfield in the U.S., including our key roles including M&A consultant, commitment letter issuer, and syndicated loan lender. It is the largest Chinese M&A case in the U.S. and also broke the record of overseas M&A deals by Chinese private enterprises.
The WH Group's acquisition significantly enhanced our bank's influence in domestic and overseas markets, and attracted more customers coming to our bank for financial service. We also sponsored China Merchants Bank's acquisition of Australia copper and gold projects of Ramelius, and we supported CNOOC to take over Nexen Energy, and we assisted China International Marine Containers and China Shipping to issue commercial paper in the U.S. We also supported CITIC Securities, China Huarong, and China National Offshore Oil, COSCO, and COSCO Ship to issue bonds in Hong Kong, supported overseas enterprises to issue Panda bonds in China, providing strong financial support to Chinese going global clients and overseas coming to China clients.
The bank was also dedicated to strengthening infrastructure construction, achieving new progresses. The bank's e-banking services grew very rapidly. In 2013, the e-banking transaction volume reached RMB 110.4 trillion, an increase of 20.8% year-on-year. The substitution ratio of e-banking channel for traditional outlets is 77.5%. Number of e-banking customers increased steadily with optimized product functions and service processes, and improved customer service experiences. The bank optimized distribution of its outlets and pushed forward outlet transformation. It has nearly 2,000 mid-to-large-size fully functioned outlets that maintain rapid delivery of self-service facilities. The bank also steadily advanced the integration and transformation of overseas information systems. 12 branches in the Asia-Pacific region launched a new system during the year, further enhancing its global IT services capability. The bank accelerated construction of global unified payment and customer service platforms with the operational and service capability further improved.
Conforming to the technology trend of the internet economy and mobile internet, by integrating the traditional financial business with modern information technologies represented by mobile internet and big data, our bank fully leveraged the competitive advantages in overseas and diversified business, and built new business models via its open technology and business platform to promote the development of the e-finance bank.
In 2013, the bank successfully launched its open platform and other innovative products such as Microbank, Easy Pay, and BOC E-Community. [ Non-English content]
[ Non-English content] Thank you, President Chen.
[ Non-English content] So we will start from the analyst friends in Hong Kong. The lady in black clothes, please. [ Non-English content]
Thank you very much, Ms. Lu. Actually, it is a lot of questions, so I will try to answer all of them.
[ Non-English content] Serving society and delivering excellence is the strategic goal set by our Chairman.
[Non-English content] After I take office as the President, I will implement and follow this strategy according to our strategic blueprint. Actually, our management approach and management method has not been changed. Our key target is that we need to implement our strategic goal and make every method towards this goal. Besides, the operating environment in 2014 is also facing with new changes and new phenomena. That is my initial view. The world economy outlook could be viewed in three main parts. U.S., we believe the economy will achieve a strong recovery, and Europe, previously it was weak recovery. But we believe it will proceed to a neutral or medium recovery. However, the Ukraine event recently will not have much influence on the U.S., but it will impact the Western Europe. But the impact is not sure. It is not definite yet.
We will follow and close watch the development. As to the emerging economies, they are diverse, different situations in different countries. In such situation, as Bank of China, a very internationalized bank in China, we will increase our business development efforts in the emerging markets, especially in the U.S. and the European market. For example, in the U.S., we believe it will be very stable recovery, and we believe the risk will decrease, and we should invest more resources to develop our business in the U.S. As for the domestic market, we believe, as I mentioned, economic situation is faced with overlay of three complex factors, the deceleration of growth, structural adjustment, and the post-stimulus period side effect digestion. With the overlay of those three complex factors, it will all be reflected into bank assets. That will be translated into the risk, increasing risk of asset quality.
Besides, we are also faced with RMB internationalization and interest rate liberalization and more and more active activities in the online financing. We believe the overall situation is overlay of three complex factors and also three key market trend developments. In face of this situation, we will firmly deliver our key strategic goal, that is to deliver excellence and strive to serve society. We can summarize it into three sentences. The first is four driving forces or four wheels. What are those four wheels? They are business development, the first as a first key point, because no matter when, the business development, this should also be the focus target for commercial banks, especially for our non-interest income or fee-based businesses, and those low risk and less capital-intensive businesses.
The second key wheel or the second key driving force is risk management, which is the foundation for our business development. Banks is industries that rely on risk management. On the current situation, we will leverage, we will increase our risk management. We have one balance sheet. Actually, we have three main balance sheets. The first is those assets and the liabilities on our balance sheet. Besides, we have some off-balance sheet commitments. For example, letter of credits and contingent liabilities, et cetera. We will also efficiently manage those off-balance sheet products. Besides, we also have some other products. They are not on balance sheet and are not reflected in the offshore balance sheet, such as, for example, some wealth management products. You call it actually the shadow banking.
We will also efficiently manage those products, and we will keep high liquidity on our assets, on our balance sheet, and we will keep a good risk situation, and we will maintain all those products in good situation. The third point is, or the third driving force is, in the current faster developing technological trends, we will keep reform and innovation to keep us in the leading position in those technology changes. Bank capital could be divided into two types. The one is regulatory capital. That is those capital funds could be included and managed under the Basel III Accord. We will effectively manage our capital. In the meantime, to achieve the goals, we also need to have team building. Those key focuses are key to achieve our strategic goal to serve society and to deliver excellence.
Besides, we also have three key working or management mechanisms. The first is to bring about the Bank of China's internal growth impetus. We will stimulate our own institutions to achieve the business growth. The first is impetus, pressure, capability, and also potential. We will make all matters to help our institutions to work with all those pressure impetus and capability and the pressure. The second mechanism is about our network efficiency improvement. For our bank domestically, we have 11,800 outlets. Apart from those outlets with different departments, we have over 900 outlets. We will have them to put it straightforward, put them on the horse. That is to achieve faster Bank of China development. Our third mechanism is to compare ourselves with peers periodically and make achievements, make improvements. I will elaborate on this. First, we will compare ourselves with peers, and to improve our market competitiveness.
The second is compare ourselves within ourselves, between different outlets, between different institutions, and to find what is each institution's position in terms of contribution to the whole group. We will rank all our institutions by order of contribution. Third is compare with ourselves. For example, all our outlets and institutions will compare with themselves previous performances to see if they have achieved improvement. The second is what are the basis we will prepare. We will prepare the speed of development, growth rate, and also growth quality. Thirdly, we will continue to make more marketing efforts, and we will find how Bank of China, as a bank with 100 years history, we should be able to achieve sustained development. That is, we will view long-term development as our key target. You also mentioned the second question related to the institutional reform.
Currently, to the end of March, we will be able to complete our institutional integration reform. To put it simple, through making the plans to implement those plans, we have been add some elements and reduce some elements. For adding some elements, those are our forces to online financing and channel management. We have increased our efforts relating to the internet financing and channel management efforts and increased our resources allocated to those departments so that our outlets will have better efficiency. Secondly, we did some minus, for example, we have removed previously five main business units. We canceled those five units, and we have reduced the layer of management levels, and we have been able to integrate between different levels of institution at the bank. Second minus is we have reduced 13 departments at the head office.
We have reduced the 13 tier one departments, and currently the number of departments at the head office is 38. We believe we have less number of departments at head office, and we have increased matrix management approach so that we can make an interface between different lines and different levels. Thirdly, we also have changed our team, our headcount allocation at head office. We have also made more efforts to encourage our outlets to be more active in their business developments, in coordinating with the head office, and to work closely between the clients team and also product team so that we can increase the corporate banking, for example, overall competitiveness. We also have did some dividing. For example, we have combined those adding, minus, multiplying and dividing. We have making this comprehensive approach to implement our institutional reform.
Thank you very much for giving me the opportunity. My name is Lucy. However, specifically operational issue, if you look at last year, the deposit growth trend is very good, especially with the base period previous is a bit less. The NIM is also up. I like to ask, how do you do this? How do you balance these two things? Because the deposit growth will bring a bigger profit playing the interest rate, but our NIM also increases with it. Explain this to us. How do you manage to do this growth in two sides? This trend in this year, will this trend be continued? Can you tell us something about this expectation, about the trend of the deposits and the NIM? Especially Governor Zhou Xiaochuan talked about the liberalization. Does Bank of China feel the pressure?
Thank you very much for your question. Let me just ask President Yue to answer this question.
Last year, Bank of China continues to optimize our asset structure, especially in reducing the high liability deposit. We make great efforts. All in all, last year, compared with the previous year, the NIM increased by 9 basis points. The entire Bank Group's growth in NIM is the result of a combination of the improved NIM of domestic RMB, domestic foreign currency, and overseas foreign currency. Basically, we did three major measures.
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[ Non-English content] Thank you very much. Now we would like to return to Beijing. Please ask for questions from the analyst from the Beijing venue.
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Zhu, answer your question. Thank you very much.
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