Good afternoon, ladies and gentlemen. My name is Zhang Bingxun, Board Secretary of Bank of China Limited. Welcome to BOC's 2011 Annual Results Presentation. This presentation by our senior management is made in Beijing and will be video linked to our Hong Kong venue to ensure that Hong Kong analysts have equal access to our public disclosures. Before we proceed further, please take note of the disclaimer on this slide. This presentation, together with our 2011 annual report, is now available on our website for downloading. First of all, I would like to introduce our senior management team here with us today. President, Mr. Li Lihui. Executive VP, Mr. Wang Yongli. Executive VP, Mr. Yue Yi. All the financials in our presentation here are prepared according to IFRS, unless otherwise stated.
There will be a Q&A session at the end of the presentation, during which we will allocate time between Beijing and Hong Kong. Now, I would like to turn the presentation over to President Li.
Thank you. Analysts, friends, I am very happy for this opportunity to meet with you. This year marks the centennial anniversary of BOC. Throughout its 100-year history, Bank of China has upheld the spirit of pursuing excellence with adoration to the nation in its soul, integrity as its backbone, and reform and innovation as its path forward, and people foremost as its guiding principle. In phase of a very complex operating environment in 2011, the bank continued to optimize asset and liability structure. Actually, I am now on page six. In 2011, the bank's after-tax profit reached CNY 130.32 billion, an increase of 18.8% from 2010.
Return on average to the assets stood at 1.70%, up by 0.03 percentage point compared with 2010 due to the dilution effect resulted from our rights issue. Return on average equity slightly decreased to 18.27%. Asset quality continued to improve with significant increase in provision coverage ratio. Bank's non-performing loan ratio decreased by 0.1 percentage point to 1%. The NPL coverage ratio increased by 24 percentage points to 221%. Capital adequacy ratio further increased to 12.97%, up by 0.39 percentage point compared with the prior year end. Core capital adequacy ratio was 10.07%, maintaining at a high level. At the end of 2011, RMB denominated asset accounted for 76.1% of the bank's total assets, increase of 0.28 percentage point compared with the prior year end. The proportion of customer deposits to total liabilities reached 79.6%, 0.59 percentage point higher than the prior year end.
The proportion of average balance of domestic demand deposit increased by 1.25 percentage to 46.1%, and loan to deposit ratio decreased by 2.95 percentage points to 68.8%. Our domestic business achieved steady growth in 2011. Profit before income tax reached CNY 133.42 billion, up by 70.2% year-on-year. RMB deposits and loans increased by 13.9% and 12.3% from prior year end, respectively. Domestic interest income reached CNY 201 billion, up by 70.4%. Non-interest income reached CNY 69.3 billion, up by 35.9%. In 2011, we firmly seized the sound opportunities of the government going global strategy and cross-border RMB business development. The total assets of overseas operation reached $ 440.2 billion at the end of 2011, up by 25.2% from prior year end. Profit before income tax reached $ 5.71 billion, up by 33.6%.
Total assets of overseas operation accounted for 22.4% of the group total exits, up by 0.93 percentage point. Profit contribution from overseas business reached 21.2%, up by 1.34 percentage points, significantly higher than domestic peers. in 2011, our overseas operation continued to support financing needs of going global clients and local key clients, continued to broaden sources of funding. Deposits and loans of overseas commercial banking business increased by 26.1% and 32.4% respectively to $217.5 billion and $178.4 billion. Currently, through establishing new overseas branches and launching China business desks, Bank of China has continued to extend overseas network to build a global service platform and improve service capability. Also, Bank of China (Hong Kong) recorded transaction volume of CNY 550 billion, 2.8 times of the business volume in 2010.
Other overseas institutions recorded total business volume of CNY 420 billion, 80.3 times of the business volume in 2010. In 2011, we have effectively diversified our business and integrated our domestic overseas operations and resources. Please look at these figures, and you can refer to the charts yourself for information. I won't go into details. Next slide point about prudent risk management. We have achieved a lot of great performances in credit risk, market risk, liquidity risk, and about one in three or two in three implementation areas. We have focused on particular strategic areas of risk management. We just want to send you a message that the China Banking Regulatory Commission has set up the capital regulatory requirement system. Bank of China is the first large commercial bank that has met such a requirement. LGFV-related risk, I'm sure this is something you've been paying attention to.
Towards the end of last year, balance of LGFV loans reach CNY 394.9 billion, accounting for 6.2% of the bank's total loan book. The balance, as well as its proportion to total loans, both decreased from the prior year end. Loans with full or nearly full cash flow coverage account for 95% of total LGFV loans. Loans granted to provincial level and city level accounted for over 92% of the total. The loan book had a reasonable maturity structure based on the cash flow project NPL balance, only 0.35% lower than average NPL ratio of the bank. Also lower than the industry average. We believe that the relative risk is within control. In both the balance and proportion of the bank's real estate loan was lower than the peers and the asset quality was sound.
The bank's domestic property developer and land reserve loans amounted to CNY 252 billion, representing 4% of total loans. NPL ratio, 0.66%, down by 0.53 percentage point. Once again, higher than the industry, or better than industry average. Average LTV ratio was below 50% with sufficient collateral coverage. For loans for small size enterprises, we provided a full range of financial services to small size enterprises, and those include services under the model, which are designed to support the high-tech cultural innovation and cultural-related small businesses, respectively. As at the end of 2011, the number of small enterprises loan customers reached 38.6 thousand, an increase of 91% compared with the prior year-end outstanding loans to small enterprises increased by 62% to CNY 388.6 billion. Non-performing loans amounted to CNY 7 billion, and the NPL ratio was 1.8%, a decrease of one percentage point.
So you can see that for the small and medium-sized business sector, indeed, that has been worsening in operating environment, yet our portfolio has not worsened because of our prudent management.
Another area which we will be concerned about is in the FX fund investment risk. We have been able to effectively reduce it and reflecting the Bank of China's proactive and professional risk management abilities. At the end of 2011, the total carrying value of debt securities issued by the European governments and institutions held by the group was $12.9 billion, of which total carrying value of debt securities issued by U.K., Germany, Netherlands, France, and Switzerland. The better countries accounted for 96%. The 4% are the higher-ranking issuers as well. In particular, you would be concerned about debt issues by Greece, Portugal, Ireland, Italy, or Spain, and we do not hold any debt securities, not for even one cent. The Bank of China also further decreased U.S. high-risk bond investment significantly. So you can see that our management is proactive.
In terms of construction of channel, last year, we have been able to increase our capabilities, and we have put in a lot of investments here. For the physical outlets and also e-channels, e-banking channels, and also net banking and also online banking, telephone banking, et cetera, we have been making progress. I will not go into the details here. Let's go into page 18, in particular about technology driving intelligent service system. The IT blueprint had been completed, and we now have a customer-centric service model. We have integrated the unification of data standards and built up its Three Centers in Two Regions infrastructure platform. This is very significant for the operation of the Bank of China. Also for the PBOC organized 2011 Banking Technological Development Awards, we have received the sole top award.
In the future, we will continue to leverage on this platform to enhance our overall service capabilities. As for the 2012 macroeconomy outlook and key focuses of the Bank of China, I will not go into the details, but just to highlight a couple of things. First of all, we will continue to optimize our structure and our customer's profile. Also we will continue to reinforce our technological advancement and sharpen our core competitiveness. Also to promote our global service system and achieve integrated development of domestic and overseas business. Also we will strengthen our group management and promote concerted business development. Also to effectively control any risks, and also to increase our productivity so as to create value for our shareholders. That concludes this highlight for now. Thank you.
Thank you President Li, Mr. Wang will go through the rest of the presentation.
Yes, I will supplement by providing the financial highlights. In 2011, the Bank of China's cash assets and liabilities increased steadily. At the end of 2011, the group's total assets amounted to CNY 11.8 trillion , an increase of CNY 1.4 trillion or 13% from the year prior end. The group's total liabilities amounted to CNY 11.1 trillion , an increase of CNY 1.3 trillion or 13% from the year prior. Loans to customers, deposits from customers rose by 12% and 14%, respectively. In the year, the group reported after-tax profit of CNY 130.32 billion , and profit attributable to equity shareholders of CNY 124.18 billion , an increase of 18.8% and 18.9%, respectively, compared to the year prior. Net interest income rose by 17.6% compared with the prior year.
Non-interest income rose by 21.4% compared with the prior year and represented 30.5% of operating income, up by 0.67 percentage points compared with the prior year, maintaining a leading position among our peers. Operation efficiency continued to improve. Cost to income ratio was 33.1%, a decrease of 1.09 percentage points compared with the prior year. The Bank of China realized basic earnings per share of CNY 0.44 , an increase of 0.05 yuan compared with the prior year, and proposed a steady increasing dividend of CNY 0.115 per share. In 2011, the Bank of China actively accelerated transformation of corporate banking business. Corporate loans amounted to CNY 4,725.3 billion , an increase of 11.3% compared with prior year-end. Industry mix of loan book continued to optimize, and the proportion of loans granted to LGFV had fallen, and proportion of loans to small-size enterprises increased.
Corporate deposits amounted to CNY 4,694.3 billion , an increase of 15.5% compared with the prior year-end. Deposits from government administrative institutions rose by 18.4%. Market share of domestic RMB and for its corporate deposits increased 0.16 percentage points and 8.89 percentage points, respectively. The Bank of China's international settlement business developed steadily and continues to lead the market. Transaction volume international settlement business reached $2.43 trillion, an increase of 23% over the last year. Two-factor export factoring volume ranked first in the world for 46 consecutive months. In 2011, we continued to increase the number of domestic effective customers. It grew by 17% to 153 million, recording a new high growth rate during recent years. Number of middle and high-end customers reached 7.35 million, increasing 85% compared with the prior year-end. The Bank of China's bank card business maintained rapid growth.
At the end of 2011, the Bank of China's effective credit cards totaled 30.86 million, a year-on-year increase of 42%. The volume of RMB card merchant acquiring transactions reached CNY 1,728.7 billion , a year-on-year increase of 56%. In 2011, the Bank of China continued to push forward with debt investments of CNY 2 trillion , among which RMB denominated debt investment accounted for 74.8%, increase of 0.9 percentage points compared with the prior year-end. Average yield reached 2.95%, up by 22 BPs compared with 2010. The Bank of China enjoyed significant market advantage in trading business and maintained number one market share of Forex purchase and sale. Its two-way gold trading volume increased by 125%, which led the Bank of China ranking top in terms of transaction volume on the Shanghai Gold Exchange. The Bank of China's custody business developed rapidly.
At the end of 2011, assets under custody of the group approached CNY 3 trillion , leading its peers.
In 2011, the Bank of China's net interest margin was 2.12%, an increase of 5 basis points compared with the prior year. Net interest margin of domestic RMB business was 2.33%, an increase of 6 basis points compared with the prior year. While that of domestic foreign currency business was 1.69%, an increase of 48 basis points compared with the prior year. Fourth quarter, the group's net interest margin increased by 12 basis points Q-on-Q to 2.2%. Net interest margin of domestic RMB business was 2.38%, increased by 12% quarter- on- quarter. Net interest margin of domestic Forex business was 1.88%, increased by 17 basis points quarter on quarter. In 2011, the group reported non-interest income of CNY 102 billion, an increase of 21.4% compared with the prior year. Non-interest income represented 30.5% of operating income, up by 0.67 percentage points.
The group earned net fee and commission income of CNY 64.7 billion, up by 18.7%, among which domestic operation increased 21.8% compared with the prior year. For cross-border RMB and overseas RMB business, they developed robustly, and settlement and clearing fees increased by 35.5%. Insurance and fund agency commission fees grew rapidly, driving the growth of domestic agency commission fees by 40%. For the commodities, there is strong demand in the precious metals market, and sales and revenue surged by 72.5% over the prior year. At the end of 2011, the Bank of China's ratio of non-performing loans to total loans was 1%, dropped by 0.1 percentage points compared with the prior year, as the quality of major industries further improved. We continue to implement a prudent provisions policy and charge provisions according to timely and sufficient principle, enhancing overall risk mitigation capabilities.
Ratio of allowance for loan impairment losses to non-performing loans was 221%, up 24 percentage points from the prior year. The ratio of provisions to total loans of domestic institutions stood at 2.56%, up by 0.11 percentage points compared with prior year-end 2011. Adhering to the principle of effective cost control, the Bank of China achieved a cost-to-income ratio of 33.1%, a decrease of 1.09 percentage points compared with the prior year. The operating expenses was 140.8%, an increase of 15% compared with the prior year. Our market recognition further enhanced in corporate governance, trade finance, foreign exchange, private banking, and brand value. We have achieved a number of awards. In November 2011, Standard & Poor's rating agency raised the Bank of China's counterparty credit rating. Outlook for 2012, we will continue to implement development strategy and take various measures to improve operating results.
First, we will bring better and higher returns to our shareholders.
Thank you for the presentation. Next is Q&A. First of all, questions from Beijing.
Thank you, and congratulations to you for very good performance. My question has to do with credit demand and also pricing for loans. Entering 2012, in the market, there has been a market concern that because of economic transformation and because of tightening of property market, credit demand is dropping. From your angle, I'd like to know, what is your take on this trend? Concerning loan pricing, last year, we see that loan pricing was increasing against 2012's economic backdrop, while credit is gradually being loosened. Again, such an economic backdrop, what do you think is going to be a movement for loan pricing? Now, concerning demand for credit, at present, our credit demand is still rather buoyant compared to 2009. Indeed, we are gradually moving back to an even keel in terms of credit demand.
It is our estimate that commercial banks in China, including BOC, when it comes to credit supply and demand, will not be in phase of a situation where there is insufficient demand for credit. We believe that the growth will be around 12%. As for loan pricing, your observation is correct. Last year, our pricing levels for various loan products have increased compared to 2010 figures. If you look at 2010's trend, I believe that loan prices will remain more or less stable, comparable to Q4 in 2011. We have not seen any signs that loan prices are coming down significantly. At least for this year, we believe that loan prices will remain stable and comparable to second half of 2011.
Thank you.
I've got two questions. First, about NIMs, because we see that in Q4 2011, BOC's NIM was rising quite fast. Domestic FX and also domestic RMB savings NIMs are going up quite fast. What do you think is the factors that will drive NIM further up this year? Also, what do you think is going to be the movement of your business this year? Do you think your business will continue to grow? Also, in Q4, for the several major banks, their NPL ratio rose in Q4 compared to Q3. Can you let us know the spread of NPL in terms of trade and in terms of geography?
Mr. Wang will answer your question.
You talked about NIM. Last year, overall, it had increased, but not all the quarters are the same. For NIM, for Bank of China, it is a global bank. We have domestic business, we have overseas business, we have RMB business, we have Forex business, and we have to segregate all those. For domestic business, for RMB NIM, it depends on the basic interest rate and on the market forces, supply and demand. When we talk about interest rates fluctuations, and you may not have noticed that for banks, NIM, it was highest at 2008. It is much higher than what it is now. After the loosening of the monetary policy, the NIM came down. Next, we will have to look at the monetary policy. What exactly will be the development and trends.
If loan demand increases, but on the other hand, supply is insufficient, then of course, the NIM would go up. However, if the demand is not that great and there is sufficient capital in the market, then it will go the other way. There is another question, which is deposits. Of course, NIM depends on both sides. What about deposits developments? First of all, it concerns currencies. At the beginning of the year, the authority said for the monetary supply, it is 14%. We will have to see monetary growth in terms of volume. That will be an indicative trend. If it is higher, then perhaps there will be more deposits and also the rates will also go higher. We will have to look at all these factors.
As for Forex, in a period of time the RMB had been revaluating upwards, whether it is corporate or individuals, there is not a lot of willingness to hold onto Forex. Actually, very often they will convert it to RMB right away, and it goes back to the Forex reserves of the country. The Forex accumulation had been weak. Exactly because of RMB revaluation, the demand for Forex had been growing. For the supply and demand imbalance for Forex, it had been growing. That is to say that is the reason why there has been pressure on the pricing. That has affected the NIM as well. As for Bank of China, because we have this global advantage, for absorbing Forex deposits within China, we will also be utilizing our international capabilities.
For example, we had a sizable CB, and we will be looking at policies of certain products, CB, CP, and basically, the head office mobilizing overseas outlets capabilities to achieve this. As you know, a loose monetary policy and overseas zero interest rate policy is all relevant. The situation overseas is therefore better than the domestic situation. As I have mentioned, we will reasonably control the NIM fluctuations. We will optimize our products, our geographical advantages, and our returns to our customers and shareholders.
As for the second question, would you answer that second question?
Thank you. For Bank of China, our balance for loans compared to our peers, we have all increased during 2011. It increased by CNY 40 billion, and it is about 3% of the total. That's a 0.41% increase. Compared to our peers, it is still at a lower level, I would say.
As for the loans balance, it is in keeping with the economic development and also the regulatory requirement domestically. The People's Bank of China had very stringent requirements, and it holds a very prudent attitude to raise some of the ratios for loans. In the following industries, we have increased our loan exposure. For example, in platforms loans, the ratio is basically lower and the cash coverage is lower. It is at about 30 million, which is 6.23% of the total loan portfolio, and our coverage is over 90%. At the same time, we are still holding on to a very prudent stance with over CNY 10 billion balance. As for property sector, our proportion is about 4%, and this is among the bigger banks, we have the lowest proportion of exposure to property.
Again, we hold a very prudent stance, especially for property sector, which has a very slow and sluggish recollection rate. So we are prudent for this sector. Apart from platform and property sectors, we have manufacturing and industries, especially for some of the industries which we have put more emphasis on them. The analysis is very clear. The loans are not necessarily NPLs for domestic corporate loans. Our estimated loan rate and also the balance for 2011. The balance had been 0.05% decrease. For concerned sectors, we have the particular concerned sectors, we have stepped up with our risk management and, therefore, we are in a very healthy position.
We have a question from the Hong Kong side. First row.
Thank you, management, giving me the opportunity. Nomura, Lucy. Concerning deposits and loans. I see that there had been a 14%, it stood at 14%. However, there has been a fierce competition for deposits competition, and there's been a lot of wealth management products as well among the peers. I would like to know from the management for this quarter, what had been the increase for deposits? Also for 2012, what exactly is your target for deposit growth?
Thank you, Lucy. For last year, our savings growth actually was very fast, especially when compared to our peers. You may have already noticed that wealth management products actually accounted for quite a sizable proportion of savings growth. So when you do your analysis, you may notice that our NIM improvement lagged behind our peers. So because of our debt structures, idiosyncrasy, that was really the situation. So we continue to widen our customer base, and we continue to grow our savings accounts. It is our hope that there'll be a 10% growth in savings and deposits, and also deposit structure will be further optimized. In January and February this year, we already have certain information, but we are not in a position to divulge it. For Q1, our estimate is that our deposit growth should be comparable to last year's growth.
Of course, we are concerned about the tightening up of liquidity in the market. Basically, this has not fundamentally changed. Fundamentally speaking, deposit growth and to what extent can it grow really depends on macroeconomic environment. We want to continue to optimize our deposit structure. For instance, RMB assets proportion already was expanded last year. This year, we continue to grow our RMB deposit proportion. Also, we are increasing the proportion for our savings loans proportion. In so doing, we will be able to optimize our debt structure and also our deposit structure. We will continue to work on all these areas this year because we believe that all of these efforts are going to contribute to our profitability and our improvement to NIM.M
But exactly what is going to be the outturn for 2012, apart from our own efforts, macroeconomic environment also plays a role, and also changes in the market will also play a role, and we will watch those developments very closely. We are going to adjust our policies and fine-tune our policies according to those changes.
Thank you, management. I am from Deutsche Bank. First of all, a word of congratulation to you for performing better than expected. I would like to talk about credit costs. The present credit costs is 16 BPs, and for the entire year, it is 30 BPs. For Q4, it was 16. But of course, you are very confident in the continuing improvement of market quality. My question for you is this. Do you believe that the good credit cost environment will continue? What if economy for this year slows down? What is going to be your exposure and risk? Also, what us analysts should be paying particular attention to? Also, what is going to be your outlook for 2012 credit costs movement?
It is standing at 0.32%, which is at a very good level. We will continue to strictly follow international GAAP and also regulatory requirements to prudently and seriously, stringently control our quality of assets and also provide for provisions. The analysts can further analyze our provisions. For a real NPL provisions, it is very low indeed. In fact, this is really out of prudence approach we have provided for some provisions. So this goes to illustrate our prudence. Also for 0.5% or around that level is in very good level. At this level, the bank is able to have sufficient profitability. This also depends on another factor, and that is customer structure. For our medium to small-sized customers, if we can further develop that more rapidly, if we can add their percentage, then we will be able to raise the level even higher.
Also because of pricing for these loans from these medium to smaller clients are higher. As for this year, for the market trend, it will probably increase the credit cost for all banks in the industry. However, it would not exceed 0.5% or 0.6%. As for Bank of China ourselves, we are confident that for credit cost, we are able to control to less than 0.5% or thereabout. Thank you. Gentleman, second row in the middle.
Thank you. JPMorgan, Chen Shih. Concerning the loans. If I'm not wrong, I see second half of last year, Forex loans had decreased. In fact, the demand, I would believe, is pretty high for Forex loans. Why is there this decrease? Is it because of your own compression or because of your source of funds? Mr. Wang had mentioned just now for Forex loans pricing, it had been going up. I would like to know from the bank, for it is LIBOR plus 150 BPs, and average, how much would be the pricing for Forex loans. Thank you.
Last year, Forex loans are as follows. In first of the year, Forex loans growth was faster than second half. In the second half, we made some adjustment, and so there was some drop. This is because we want to strike a balance in our portfolio, and for BOC, in terms of asset debt management, we have to maintain a balance between RMB and foreign currencies, as well as domestic and overseas segment. We have to exercise prudence in our management so that we do not become lopsided in our portfolio. So my answer for you is that we made some conscious adjustment towards the second half of last year. That was the result of our conscious fine-tuning. As a result, our balance became better.
If you look at foreign currency loaned proportion, you could see that towards the second half of last year, there was some drop. For this year, we want to maintain Forex loan proportion at a reasonable level. We want to maintain a reasonable growth for our Forex loans, both in the domestic sector and overseas sector. At the same time, we're going to redouble our efforts in order to expand source of overseas funding, including the issuance of CPs and [CD], and also the absorption of foreign deposits, and so on and so forth. So this is one side of the story. As for Forex loans pricing, because last year, foreign currency loans prices have gone up quite significantly. At present, Forex loans for domestic market and also overseas market are in separate categories. I believe that Forex loans prices should not continue to grow this year.
The momentum cannot be maintained. I think basically, the prices will stabilize. Forex loans proportion may come down. Because we are only in the third month of the year, we do not yet have a very accurate figure on the over trend for this year. We hope that in Q2 or even Q3, we hope that we are in a better position to discuss with you this particular point. The gentleman in the back.
Thank you. My question is about income. If you look at the four major banks, your service is most comprehensive, and your fee increase during last year was slower, relatively speaking. Because your IT master plan is completed, in the coming few years, your fee increase momentum is going to pick up again and go back to the normal level. For non-interest income, in fact, for BOC, compared to our international peers, our increase is actually at a pretty high level, our increase growth, both domestically and internationally. Our international increase had been some 35%. Domestically, it had been almost 20%, relatively high levels. At the same time, also, we have noticed that compared to our peers, our non-interest income had not been as fast as some of our peers.
You have also noticed that for the regulatory bodies and the China Banking Regulatory Commission, they have made more stringent, the operations of the banking industry. Also, the different levels of banks are also abiding by this new regulations and policies. For this particular source of revenue, I would believe in the coming year, personally speaking, I would believe it would not be growing as much as in the past years. It will grow, but on the other hand, the margin of growth will not be as rapid as the past few years. We have also noticed that for the first few months, for non-interest income of our peers, it had come down a little bit. As for Bank of China, I think we are doing well, and for fee business.
For this year, for our non-interest income, we believe would be still on the increase, but averagely speaking, whether it will be as high as that of last year, we will have to wait and see. Where are the sectors of growth? First of all, I think we have to leverage on our advantage. For example, in investment banking business, insurance business, we have very comprehensive services. In these operations, we will have to leverage on our existing advantage. Also last year, we had come up with a more aggressive development strategy, and this will also add to our non-interest income. Thirdly, for our overseas business, this is our traditional advantage and leverage. We will continue to build on that advantage to provide better and more varied service for our clients, and also cross-border RMB business.
Offshore RMB business, we want to introduce more products in order to increase our revenues. For non-interest revenue, for domestic RMB clearing or settlement business, we are rather small in terms of the market share there. Analysts would have noticed that last year, for RMB settlement intermediary business in non-interest income, our income had been higher than our peers in terms of increase, and this year we will continue. Non-interest income also depends on the capital markets development in terms of insurance, agency business, funds business. All these will depend on the developments of the market itself. So it is difficult to judge going forward what China's capital markets will bring in terms of business opportunities. But for our bank in capital markets and the financial markets, we have our advantages.
Our headquarters provide services to their clients in terms of intermediary service and agency business, and we are in a very competitive position, and we would want to build on that strength. I cannot give you a very hard and fast figure, but we will be able to delve further into this as time goes on.
Other questions? The last question, please. Second row, the lady in the middle.
Thank you for providing me this opportunity. Ye Meiji from Barclays Bank. Concerning deposits, I noticed from the annual report the re-categorization of deposits, and there is some structural deposits which have been re-categorized as clients' deposits. How is this treated? What exactly is the reasons behind the re-categorization? Also, in the wealth management and its contribution to the Bank of China's revenue, it is rather high. What exactly will be the trend in the future? What exactly will be the proportion of deposits from these wealth products? Also, what is the interest rate for these wealth products? Thank you.
First of all, about structure of deposits. In our financial report, which is done in accordance with traditional method, the media and the analysts may not be too familiar with the operating situation. So when it comes to the important parameter of savings to loans ratio, they may not have a very good grasp of it. In order to enable the public to understand better about this particular benchmark, in accordance with People's Bank requirement, we re-categorize our deposits. For instance, tabulated wealth management products will be counted towards deposits.
Businesses such as financial companies and also insurance companies. Deposits will be counted towards deposits. So this is for benchmarking and also for standardization. This is actually to facilitate your analysis and also facilitate your understanding. Secondly, last year, in terms of increasing our overall deposits, in new deposits, tabulated wealth management accounts showed a slight increase. These products, actually are products that are born as a result of marketization of the interest market. They are going to be longstanding products. At this point in time, it is difficult for us to say exactly what price structure it will be subject to. During the past several months, it is between 4%-5%. So they are fluctuating within this range at different times.
In terms of pricing, if you analyze further, you will notice that wealth management products, both tabulated and non-tabulated, or scheduled and non-scheduled, are actually priced at a medium level. Our cost is also at a medium level. We do not want that cost to rise too high. Also, for scheduled products and the proportion against the whole, we hope that the proportion will go up as a result of further marketization of the market. This will also happen to other major banks. In any case, other factors that are at play include market liquidity and also macroeconomic environment. If liquidity is loose, then scheduled products proportion will come down. If it is the other way around, then the proportion will go up. In future, I hope that there will be further opportunities for us to discuss this further.
Next, we revert back to the Beijing venue. Beijing analyst?
Thank you. I have got two questions. Number one. For non-scheduled wealth management products, I would like to know what is its share, and also in terms of volume of transaction, what was the figure? Also, to what extent was your own in-house profitability be able to replenish your internal capital?
First of all, on your first question, for Bank of China, our wealth management products that are tabulated, whether they are from a total volume and the proportions, I would say of the total, it is lower than our peer banks. This year, we will continue to develop this kind of business. For 2012, we hope that for these business, under the premises of complying with the regulations, we would want to further develop this business. Well, actually it is a securitization product.
For the investors, for the corporates, for the banks, they would be able to bring on positive effects all through. However, the government would want, and the regulatory bodies would want to be able to control and regulate the risks involved, and we will have to tell our investors very clearly as to the choice of products, and we have to sell it to the right types of clients, and also comply with the regulatory requirements of the regulatory body. So for this kind of wealth products, there will be increase. However, the actual numbers, it is not convenient for me to disclose anything here. Now, as for capital supplement,
Mr. Wang?
No, I think you were talking about self-replenishment of capital.
In 2011, it was CNY 120 billion plus, and our dividend was 35%, and the rest of it would go into our capital for the bank for this year. I do not know whether I have answered your question. As for capital supplements, this is something that we are of course, concerned about, because the CAR is a core index for our operations. Our analysis is that, one of course, we have to comply with regulatory requirements, and secondly, we will have to support the development of our business going forward. Thirdly, it is not that the higher the CAR, the better. So it has to balance with other considerations, such as future development. We have to analyze our business growth capabilities and how do we get to the capital. That would include after-tax profits, after dividend payout. The rest is capital replenishment.
Also accessing the financial markets at second. Also there are other capital sources or further capitalization channels that we have to explore.
Apart from replenishing capital, optimizing the management of our assets, also lowering our capital usage, for example, in recategorizing and fine-tuning the risk levels of our exposure, also optimizing that structure to lower the capital usage. That also fit into the requirement of better utilization of our capital. So in the next period of time, especially when Bank of China is already one of the systemically important banks globally, we will rationally approach our capital replenishment approach. I would like to supplement. For the dividend payout, the board has decided on 35%, and that has to be approved by the shareholders meeting. We will decide on a 30%-35% payout ratio in the future, and this has to be recognized and rectified by the shareholders so as to have sufficient channel for replenishment of capital.
Also, we have to access the capital markets in 2012. We do not have any plans for rights issue or equities reissue. But we will be looking at regulatory requirements as well as our growth necessities to look at financing possibilities, perhaps starting from next year. That is the year after, whether we will be going into the accessing the capital markets. Also, we will be utilizing a light on capital type of approach of development. We will be utilizing our capital in the most optimized manner. Thank you.
Thank you, analysts, for coming to the meeting. Thank you very much for your participation. Thank you, gentlemen, for your presentation. Thank you.