Welcome to today's result presentation. I am quite pleasant to meet you friends, and also thank you for your long-term support and care to Bank of China. We have taken the principle of serving society, delivering excellence, and participate in international development. Leveraging on our rapid overseas business growth and advantages in diversified operations, the overall business realized steady growth and achieved new development under the new economic normal. Profit after tax stood at CNY 95 billion, and the profit attributable to equity holders is CNY 19.7 billion, increased by 1.69% and 1.4%. As its quality control was strengthened and the provision remained sufficient, the NPL ratio stood at 1.41%, and the ratio of provision to total loans of domestic institutions reached 2.6%. Capital equity was strengthened with rising shareholders' centers.
The bank successfully issued CNY 28 billion of second-class transferable shares and completed the conversion and redemption of its convertible bonds during the period. As a result, Bank of China's capital increased about CNY 41 billion and became the fourth largest among the world's top 1,000 banks, rising three places compared with the previous year. For the first half, our asset structure has been optimized. We also echo with the acceleration of rate [liberalization] . We have strengthened our financial support to the real economy. The bank loans and advances to customers amounted to CNY 8.9 trillion, increased by CNY 413 billion. The domestic RMB loans increased CNY 340 billion or 5.6%. We actively support China's economic restructuring and industry transformation and upgrading, loans to high-end equipment manufacturing, new energy resources, and other industries has rose 8%. We actively supported SMEs development and key projects under the global efforts.
We further observed that people's livelihood and their consumption needs with the proportion of domestic personal RMB loans to total domestic RMB loans up by 0.5%. We closely tracked financial market dynamics and proactively adjusted the structure of our investment securities portfolio. With increased size of its investment in domestic RMB bonds, its investment securities increased rapidly. The bond security investment has enjoyed a significant increase of 23.1%. Also, the domestic RMB investment expanded 20 basis points year- on- year in the interest rate downward trend. We have also noted that we will focus on expanding our sizes in our capital. You can see that market liquidity remained quite adequate and the competition for deposits became more fierce. As analysts all know that CBRC has been determined on the savings and the deposits of a bank. We have strengthened our ability management and strictly applied deposit deviation control.
By the end of June, we are the best performer in four major banks in terms of deposit deviation control. The customer deposit amounted to CNY 11 trillion, an increase of CNY 651 billion or 60% compared with last year. The domestic RMB deposit is increased by CNY 457 billion. We strengthened our product innovation by expanding funding resources. We vigorously attracted more deposits from administrative institutions, which has exceeded over CNY 2 trillion. Our target will be CNY 3 trillion. We are actively promoting our salary payment agency services and cash management of multinational companies. Recently, the cross-border cash management promotion has been quite good and has been incorporated into our business. We are also expanding the third-party custodian business, and has won several competitive bids for corporate and ESG custodian services.
We have make a full advantage of our internationalization edge to expand our overseas business and our funding resources. The overseas funding balance reached $61.2 billion. The steady pre-provision profit growth, we can see that for the first year, the overseas and domestic interest rate underwent downward trend. The bank has been faced with net interest margin pressure. The NIM has recorded at 2.18%. We can see that the growth of domestic economy continue to slow down. We are willingly fulfill its social responsibility by actively providing financial support to real economy and SMEs. We have subsequently reduced a lot of charges and service fees. You can see that the net non-interest income decreased by 8.5%. With such operating pressure, we have strengthened our business structure adjustment. We expand our income sources.
Its agency and bank card businesses achieved fast growth, which drove the net fee and commissioning income to rebound. For the first quarter, it is about $200 million. The second quarter is also seeing an increase. We are also trying to save costs and to further optimize its extension allocation mechanism. You can see the cost-to-income ratio decreased by 69 basis points year-on-year, maintaining at a low level of 25%. Our bank's provision of pre-provision profit realized a steady growth. You can also see that we have a smooth development of overseas businesses, which seized the opportunity arising from RMB internationalization. For the first half of the year, our overseas assets has totaled $800 billion, an increase of 6.8% compared with last year. The profit before tax was $4.6 billion. Accounted for 28% and 23% of the total group assets and the [PoB] assets profits.
We are also expanding our global service network. We have 635 overseas institutions in 42 countries and regions. We constantly improve our cross-border service capacity while consolidating its traditional edges. We are also trying to provide more innovative methods and services for overseas investment. We have set up successfully cross-border matchmaking services for SMEs in China, Europe, Arab, American, and ASEAN countries. We have attracted over 1,000 SMEs to help them to go global and coming in. In terms of One Belt One Road Initiative, we are seizing great opportunities and to make it a very important part of building a financial artery for One Belt One Road. We are focusing on internationalization and combining together with One Belt One Road Initiative. We strive to be the go-to bank for Chinese enterprises and to be the main channel for cross-border RMB business.
We have expand our global service network along One Belt One Road countries and improved organizational design, coordinated all of the efforts to push forward, and made a strong start in building a financial artery for the Belt and Road Initiative. In the strategy, we have conducted the following. First, we have successfully issued the first Belt and Road bond, which is offered in four currencies and listed on five exchanges simultaneously, setting a new record as the largest overseas bond issuance by a Chinese bank. We also actively support the key projects along One Belt One Road. We rolled out nearly 300 projects with intentional credit about $68 billion. We deepened cooperation with financial institutions along Belt and Road and proactively pushed forward cooperation with bilateral development institutions.
With the current 460 correspondent banks along One Belt One Road, the bank strengthened cooperation with key correspondent banks and signed One Belt and Road business cooperation memoranda. Fourth, it enhanced foreign exchange potential capability for countries along Belt and Road, and became the first bank providing forward exchange and swap services for Russian ruble and Kazakhstan tenge against RMB. We are also accelerating the extension of our service network along Belt and Road and opened up Vietnam branch in Laos and others. Currently, the bank is also setting up overseas institutions in 16 countries along Belt and Road. The bank and BOC (Hong Kong) kicked off the outlets' restructuring projects in ASEAN and made good progress. Meanwhile, the competitive strength of RMB internationalization also expanded.
In the first half, our RMB clearing volume of the group was CNY 206.3 trillion, while our cross-border RMB clearance volume reached CNY 148 trillion, maintaining a leading position globally. We also got the certifications in Hungary, South Africa, and successfully launched RMB clearing services in Serbia and [audio distortion] . We formally launched the Hong Kong offshore RMB center, and our market share in underwriting the offshore RMB-denominated bonds ranked top among the domestic peers. The bank pushed forward cooperation with global major exchanges. Forming a truly full-service bank with set open banking services for major exchanges. The bank further consolidated its leading position in the pilot free trade zone businesses. It led peers in terms of operation zones and account numbers and deposits and their loan balances in Shanghai free trade zone and established a market-leading position among the pilot free trade zones in Guangdong, Shenzhen, and Hainan.
The steady diversification of our platform is another highlight. The bank's diversified business platforms achieved outstanding performance. BOCI recruit oil index and became the first Chinese financial institution to launch an international benchmark oil index. BOCI earnings from brokerage businesses increased substantially. It increased by 32% compared with the prior year. BOC Aviation's aircraft leasing business also achieved sustainable growth, and its external rating was upgraded to A minus. BOC Insurance successfully completed the acquisition of Samsung Air China Life Insurance Co., Ltd.. BOCI Investment rigorously promoted the group's One Belt One Road business and realized rapid growth in the operating performance in the first half. The bank's pre-tax corporate and other comprehensive income increased by 42%, and it was the major propeller for the group's profit business.
We pay close attention to the economic growth, and we also set up the credit guidelines in order to meet up the requirement on the risk management. We also focus on the other risk management measures such as post-lending management, collateral management, risk classification, and regular risk investigations to promote a systematic and thorough two-stroke for stabilizing asset quality. At the end of June this year, its non-performing loans ratio was 1.41%, and the special mention loan ratio was 2.3%. The provision with a local loan of a domestic institution was 2.68%, and the group's credit cost was scheduled to be 0.63%. The bank also stepped up debt collection and resolution of non-performing assets with progressive measures.
In the first half, the non-performing assets resolved by the domestic institution amounted to 43.4%, up by CNY 16.5 billion, and in which the cash recovery amounted to CNY 19 billion, up by CNY 5.9 billion. The bank continued to enhance risk management of overall credit exposures and strengthen risk control on key areas, such as local government-financed vehicles, overcapacity industries, and the real estate sector. The bank intensified internal risk management and risk management on collaboration businesses to prevent risk transfer between domestic and overseas partners. The bank constantly enhances and develops liquidity risk management based on new regulations, and its liquidity coverage ratio has met regulatory requirements. The bank continued to enhance its efficiency and effectively serve digital channels.
It is accelerating the construction of a smart outlet that is improving each outlet's management and increasing daily average customer deposits and loans. The customer number and activities of e-channel steadily increased. E-banking transaction volume grew by 50%, and the promotion of business continued via e-channels such that overall business increased by 86%. The bank continued to improve its competitiveness of e-finance business. The number of e-finance customer and related transaction volume recorded a sustainable increase of 63% and 50%. It promotes online once possible service systems and facilitate leading position. Looking into the second half of 2015, in the world economy still exists uncertainties, while China's economy is still facing downward pressure. As you are all analysts, you know that in the past two months, the foreign market, the interest rate, as well as the stock market are suffering from a lot of changes.
If you look at the global economy as well as the capital market, there are a lot of fluctuations as well. Facing such a situation with so many challenges, we have to continue to undertake our social responsibility and digital strategy. For BOC, this is also the direction for our business strategy. So four things. Number one, we increase our revenue, stabilize the growth in order to further improve our operations efficiency. Number two, we adjust our structure and promote transformation in order to further enhance our propeller for the business growth. Number three, risk management and get rid of the NPLs to improve the quality for the control bank internally better, so that we can lay a better foundation for the future. We will undertake our social responsibility and turn ourselves to be the best banking partner.
We continue to internationalization, the marketization, as well as diversification by business, so that we can really do a good job in our financial management to bring a better return to our shareholders. Thank you.
Thank you, Mr. Chen.
Thank you very much.
Now we would like to open the floor for questions. Please put up your hand if you want to ask a question. Please remember to identify yourself before you raise a question. For the interest of time, I am sorry that I can only allow one person, one question. We will start from Beijing Venue first . Okay, the man sitting in the center.
Good afternoon. I am from [audio distortion] . I have a question about your overseas business. While historically, overseas business is an advantage of BOC, we can see that for the first half of the year, we have made such a great achievement in terms of Belt and Road. I have also noticed that the overseas business growth rate has been lower than last year. I want to know what is the main reason, what is your business strategy for the next half of the year in terms of overseas business? Thank you very much.
I will take this question. Thank you very much. As I introduced in the PPT slides, for the first half of the year, our overseas business, including our diversified business in overseas countries, has made very good achievements. For the first half of the year, the profit actually coming out of overseas business quite a lot. As you can see that the contribution of profit before tax from overseas business had been improving. We can see that our interest spread or i nterest margin has been lower than others. Why we have made such good achievement is because we have a very strong layout in overseas countries. We have an asset of CNY 800 billion, accounted for 23% of the total profit, and the asset accounts for 28% of the group's total. Let me give you a very simple metaphor that the change in interest rate changed by 3%.
We do not want to judge whether it is a good thing or a bad thing, but for BOC, in our balance sheet, the benefits are that it would contribute to our profit. In the year 2004, we can see that our bad assets has been shrinking. Why? That was because the appreciation of RMB, and we can see that the overseas market had been benefiting from such changes. Nowadays, we see that RMB has been depreciating for the time being. I think that it is a positive factor for our overseas business. The asset proportion of overseas business has been increased relatively, and we can also say that this 3% is relatively a minor factor. I want to emphasize is that the foreign exchange rate changes or fluctuations will be continued to occur in years to come.
We do not want to see RMB depreciation in years to come, but we are seeing that we have to react to the fact that the RMB exchange rate is always changing, and this will help us to reduce our risk in overseas business. Also, Chinese economy and foreign economy are on different cycles. So with this multi-cycle situation, the risks are there. I should say that we need to have a better balance of the assets based in China and the overseas countries. So these are all good factors for our overseas business. For the first half, the growth has been slowing down. That is because we have a large volume out there already. It would be better that we grow slower than relatively faster. Because when we were growing fast, people may say that we are growing too fast.
But I should also emphasize that our growth rate in terms of loans and deposits are all very good. So I think that there are good factors to our overall business situation. I should say that this will continue to be the case, that we see fluctuating exchange rates. But with the weakening export, we have suffered some loss and a slowing down of some income growth. We should accept that. So I think that the overseas market is still key in our strategy, and we have to continue to work hard to boost our overseas business. In our strategy, we make overseas business, our internationalization, and Belt and Road Initiative as one. So our overseas business will also need to face the problem of structure optimization. In the past, maybe we just focus on the financial market.
But nowadays or in the future, we are looking towards our being a big player in the financial market, but also play a big role in Belt and Road Initiative. We need to enter other markets, for instance, African markets, and also to expand our network and layout. To set up more institutions and branches in the overseas markets, et cetera.
So what will be the direction in the future?
I think we have three types of customers, and we have 10 different types of products. We have three platforms, and the fourth one is that we would like to cover 50 countries. Right now, we are in 42 countries already. By the end of the year, we will reach 50 countries. We are also giving a bigger role to BOC Hong Kong. Well, actually, the role of BOC Hong Kong has been very important in expanding our overseas business, and we will lay down a good foundation for our future development, which make it a good advantage for all of us. Thank you.
Thank you. May I invite the second question from Beijing? This gentleman in the front row.
Thank you very much, management, for this opportunity. Ping An Securities, I am [Zhou Qi]. My question is about the diversified operations. We have already seen that BOC has been a leader in the diversification of business and from the position of this commercial platform. With the very diversified platform, it also contributes a lot to the business growth. We just want to know, like in the future, in terms of the diversification business operations, what is your long-term strategic and what are the specific measures you are going to take? Also, in order to enrich such a platform, is there a specific area that you will give special attention to?
Now may I ask you a question first? For this is the Ping An Securities and the Ping An Group. What is the relationship between them? Is it a subsidiary?
Yes.
Thank you. Now I would like to ask Mr. Zhu, our Vice President, to take your question.
Thank you for your question. Ping An Group is actually also exploring the diversification of business, and it is also one of the leaders. Mr. Chen already mentioned in his presentation that BOC has also made quick progress in our diversified platform, particularly with a few highlights as well. Talking about the diversification of our business, we have already been well-known position among all the peers. In terms of our diversified business, it is definitely our strategy for, as well as for supporting our continuous profit making in the future. At the national level, in order to build up a multilevel, in-depth capital market, the central government has been constantly at this as well. So it also provides a new support for the development of our own diversification of business.
As I said that with the diversified platform, we enjoy the 42% of growth, and the investment is 78%, insurance sector 59%, and the wealth management is also very big growth. This full scope and diversification has already playing a more and more important role for our business, and it is also a very good foundation for future growth. The most diversified bank usually have in the domestic market, security business and property insurance business, while in the international market, they have security business as well as the property insurance. We have a leasing platform. We have a security platform as well. Actually, we have a wholesale licenses for these businesses. You know that recently, among our types of diversification, we just have a new one that is the Air China Life Insurance.
With the coming of the insurance, how can we give full play to our bank and insurance and how to make better use of the cross-selling and up-gifted for the future to provide a better platform and a better potential for growth? As a next, I can use two words, which is what? Number one is converge. Number two is explore. For the converge, we know that we have a very big platform that covers a lot of entities. When you converge all of that in order to generate a new dynamic set growth. Number two, the convergence also needs to be done with the different platforms internally. As for explore, I mean, currently, we are opening up the capital markets in the multilevel, in-depth way.
We will integrate the market trend together with our own strategy in order to explore what will be the best way for us to grow our diversified platform. I would like to borrow what Mr. Chen Siqing has said, that we will not. We will use the model to run the single-mode banking bank to support our diversified platform. Thank you.
Thank you very much, Mr. Zhu. We also have many analyst friends from our Hong Kong venue. Maybe we would like to thank you very much for coming. We can give the floor to Hong Kong venue and pass the floor to our host in Hong Kong. We will have the lady on the first row.
Good afternoon. I am from UBS, my name is [Lucy]. I would like to ask about the net interest margin. Since the end of last year, the Central Bank has reduced the interest rate many times, and this has imposed pressure on many banks and NIM. I would like to know what is the reason and to give an analysis in terms of the cost, the demand, and the pricing. Maybe let us know what are the factors behind that phenomenon and to what extent. I would also like to know what is your expectation for the NIM for the second half of the year, since recently we also see another round of lowering interest rates.
We will give this question to Mr. Zhang.
Thank you very much for your question. As affected by the lowering interest rate and also the marketization of the interest rate, we see that our NIM has been 2.18% or 17 basis points down from 2014. In the second half, we see that we are still facing these pressures in terms of our [IMT] as a result of marketization of interest rate. We have to consolidate our management of assets and debt. We are doing this in two ways. First, on the side of the debt, we will make the customer-focused transformation, and we know that it is very important, and we will do it through innovation in products and our services in order to increase the deposit proportion in the overall assets. Also, we will enter into a competition that is featured with low financial costs.
At the same time, we have to control the cost of the deposit. We have to play our advantages and to strengthen our management of debt, to issue some bonds and to use some market financing tools and to diversify our management channels. The second is in terms of the assets. We have to optimize our asset structure and to meet our asset yields. In terms of loans, we would like to leverage our assets and to leverage this asset. We are also making good use of the additional loan resources to the areas with higher risk level, especially the key areas and the key industries. We are also trying to strengthen our loans to individuals and to increase the percentage of individual financial services. We will also make more investments in terms of domestic and foreign currency bonds. As you can see, that percentage has been always increasing.
Another thing is that we have to consolidate our treasury construction and to adapt to the interest rate liberalization environment and to improve the internal capital transfer and pricing system and guide each business unit as well as branch office to price deposit and loans in a reasonable manner. We will accelerate our construction of foreign capital pool and to connect domestic and foreign capital markets and to improve our capacity to allocate globally our assets. Thank you very much.
Next question. This gentleman in the first row.
Good morning. My question is about the RMB exchange rate fluctuation. [audio distortion] in terms of your foreign exposure , and in terms of the internal guarantee and guaranteed loan to the Chinese enterprises. Thank you.
Thank you very much. I would like to invite Mr. Ren to take your question.
Thank you for your question. Just one small correction. We have overseas assets and reliability for the proportion is higher. That is more internationalized. However, our forex exposure is not very big. Think about the influence. The influence actually really depends on the exposure, how much exposure you have. Just as you said, it is true that forex is a very common concern, also a very hot topic for people. Recently, the forex market is also changing with some new characteristics. To summarize, these are the characteristics. Number one, the expectation now for deposit of USD. USD will get stronger this year, and people have higher and higher expectation on it. This is also the trend. For euro and the yen, they are still very flat or very weak. For the new currencies among these new entities have depreciated already.
Our actual forex rate actually is also getting stronger, and it is also deviating from the market's expectation. By the end of June this year, our spot forex exchange between RMB and USD already appreciated by 30%. The PBOC announced the forex quotation reform. Therefore, you saw a lot of fluctuations in the market. I think that we will definitely have to release the pressure because of the depreciation of RMB earlier, so that the forex rate can really reflect the market's expectation. I think this is a very important step in the forex reform. For us, we enhance our exposure management in terms of forex market in order to further control any exposure. This is as well that with our overseas market, our facility has already covered 42 countries and regions. Our assets and liabilities basically account for one third of total.
So for the forex exposure, actually it is a very important management task for us. We have taken it very seriously, and we have already set up a very established and effective tools and mechanism in place through adjusting the social funding resistance liquidation, so that we can minimize the mismatching of such activities, so that we can effectively reduce the impact of such activities. And also through more managerial measures, we can effectively control the exposure of forex fluctuation. And talking about the influence, it is still within the acceptable range. As you all know, for the operations activities in different countries and regions, there are different regulatory requirements. And we need to allocate some resources and assets. Therefore, there will be exposures. So by the end of June, just as we disclosed, our exposure in the overseas market dramatically reduced than that of end of last year.
In future, we will continue to keep a close eye on the changes in the international market and dynamically adjust our own management measures on the forex exposures. This is about the control of such risks and exposures. Meanwhile, we will enhance our management on the liquidity, because such fluctuations in the market will definitely impact the liquidity directly. For BOC, we have been sticking to the principle of safety, liquidity, as well as profitability. We maintain a balance between these three. I believe that we have a very sufficient liquidity in the bank. And in the currency market, we are a very important player. For a very long time, we have been a very important player in coordinating the market. Recently, because of the fluctuation in the forex market, liquidity narrowed down in RMB.
So we give full play of our settlement bank and the clearance bank in overseas market, and so that we can effectively ease the fluctuations in the local market overseas. So through managing the exposures and risk, meanwhile enhancing the liquidity, so that we can better undertake the responsibility of a big bank. We are also a very professional bank for the foreign trade and the foreign exchange. While managing the liquidity, we are also looking full play of our competitive edge. The fluctuations of forex also gives us opportunities for new business coming. So this is what we see about this reform. So actually, with this reform, our customers realized that they have a better awareness about risks and the forex changes. So under one directional market, we recommended a lot of the value-preserving products. A lot of customers, they are more willing to accept such products.
So out of the fluctuations this time, in the past, a lot of our customers accepted our value-preserving products, and they got more gains out of them. We do have a lot of customers. They made a profit within just the two weeks, and actually, the gains was even higher than the yearly gains out of these two weeks. However, there are some other customers. They had debts and didn't accept our value-preserving products, and now they realize the value. As Mr. Chen just said, we will capture the market opportunity. This fluctuation actually gives people a lesson. We will steadily launch more products about options, futures, and forwards. So all these different methods so that we can provide our customers with more foreign currency debt as well as other products for better value adding and value-preserving. Thank you.
Next question from the third row. The gentleman on the third row.
Thank you very much for the opportunity to ask a question. I am from [audio distortion] I want to ask about loan to deposit ratio. Where should we [audio distortion] battling to your restriction about loan to deposit ratio is a good time for banks. I would like to know what will be the new strategies [audio distortion]? I would like to know in what rate will this grow?
Thank you very much for your question. We will have Mr. Gao to answer this question.
Thank you very much. Well, as for the loan deposit ratio, historically there are some in our pictures, and it used to be a compulsory indicator. The restriction has been canceled by the council. If that has been passed, then it will be a very good sign for the commercial banks operation. As you mentioned that because of historical reasons, for BOC compared to the other commercial banks, the loan deposit ratio is relatively high. This impact will be also applied to BOC. As mentioned, although there will no longer be restriction on loan to deposit ratio, it will still be monitored. It will still has impact on our management on liquidity as well as our deposit.
I should say that deposit will continue to be a very, very important foundation for our business, that is to expand our deposit volume and also to focus on the structure and quality of deposit. It will be even more important in the future. For BOC, in the coming days and years, I think that we will continue to expand the volume of deposit and loans and to focus more closely on the structure of the loans and deposits. I should say that for the following three aspects, I think that we will focus more on the daily deposit rather than time sensitive deposit. Another is that we will focus more on customer instead of being deposit oriented.
The third one is to focus on the structure of the deposit rather than the volume of the deposit, especially we need to comply with the requirement of the LCR as well as the liquidity coverage ratio as well as the asset management. We have to pay more attention for those deposits that are not going away. For instance, SMEs' deposit and individual deposit. We also need to look closely at those customers. For instance, the settlement, the salary payment services, the agency services, those services bring along deposits. For that side, we should also be very cautious about that and pay attention about this. Another one is that we need to comply with the requirement on the interest rate as well as other related requirements. We have to make it sustainable and well-balanced. We need to make it stable and healthy in terms of our loans and deposits.
As introduced by Mike Pierre, we need to work closely with national strategy and to discover the new blue sea of our business. No matter is One Belt One Road or Yangtze River economic zone or new free trade zone. We would also like to support the development of people's livelihood, to support Internet Plus, as well as some innovation industries. These will be our key industry focus. We would also like to adequately and reasonably allocate our financial resources in order to provide better and more comprehensive financial services that are cross-region and cross-market. Thank you very much.
The next question comes from the gentleman on the third row.
Thank you management. Morgan Stanley Analyst, Xu Ran. My question is about asset quality. We have observed that the pressure for asset [audio distortion] For those NPLs where are they? Can you share with us what about the NPLs for the next quarter, second half and any new changes? Thank you.
Thank you very much, Analyst from Morgan Stanley. Thank you for your question. Let me take your question. Analysts actually look at two things particularly. Number one is the revenue, including interest and the yields. Number two, assets quality. For a bank, for ourselves, this is also what we concern the most, asset quality. As you know that, actually, the controlling of assets quality takes most of our time, including all the management. We spend a lot of time on asset quality control. If you look at the economic situation in China, particularly the overlapping bad years, it did limit the trend of asset quality for all banks. Up to now, if you look at all the banks, it is all the same. Some for some small and medium sized banks, maybe they are a little bit different.
But for all other banks, the asset quality, especially the NPLs, is climbing back and going up even though objectively everybody is working so hard to control it. However, no matter what measures you take, actually it has not reverted such a trend of ongoing NPL level. It is only a matter of how much you can reduce it. Currently, the total NPL in China is CNY 1.9 trillion, and the NPL ratio is also 1.5%. In China, in domestic market, our NPL ratio is above 1.5%. However, if you look at our total assets allocated in the world, at the group level, the NPL ratio is controlled to be 1.1% only. So from this perspective, our NPL ratio compared with all the peers, it is under the average according to the official statistics.
However, this year we are not so optimistic because there are still a lot of challenges waiting for us in the second half as for how to control the NPLs and how to revert such ongoing NPL ratio, how to collect and absorb most of the NPLs in order to improve our collection ratio, to consolidate, to further enhance our NPL under balance sheet. There is a lot of things for us to do. So currently, if you look at our asset quality, there are the following characteristics. Number one, it is not the traditional. Traditionally, what we think about the three tier loans. There are local government-financed vehicles, property, real estate industry, or the local energy industry. Actually, we don't have so many NPLs in these three categories. I had a slight trouble in my presentation. But these three categories have NPLs.
As for the local government-financed vehicle, it is 0.07% only, very well controlled. 3% of provision already. As for the local energy industry, only 0.46% only in NPL ratio. And the property and real estate, 0.79%. So these are all below our average of 1.1% of global level. So actually, the two other areas, number one is equipment manufacturing, the other is wholesaling. Wholesaling and retailing. These two sectors, actually, our NPL ratios are higher. So this is by industry. By region, our NPLs are mostly located in China, and the overseas NPL ratio is very low. Domestically, they are around the biggest provinces, in the coastal provinces. So this is the second characteristic. With regard to the size of NPL, we are not the biggest bank, either we are not the smallest one, but we are in the middle or middle to big.
By product, our NPLs, some of them is about the working capital, just like the trading financing. Some others, they are for the fixed assets loans. So basically, they are bilateral and multilateral trading. So this is about the loans. And by currency, most of them are in RMB. So if you look at our loans, because we are a G-SIB, we have the following characteristics. As for key organizations that have NPLs, usually they are below the Tier 2 banks. Of course, there are some other big NPLs. So I don't hide anything from our analysts. For our loans, we do have a lot of loans, but generally speaking, obviously our risk management system is very, very tight. Of course, we have taken a lot of measures to fight against the NPLs compared with other peers.
We do have our strength even though we do have a lot of NPLs. As for what we do in the second half, actually you are analysts. For each time we talk to analysts, you can look into what our plans is. We have to win this battle. As for how, I can summarize our strategy in short. Number one, we will stick to our good planning. Number two, we will manage the amount carefully. Number three, we will take three measures and more measures simultaneously. Number four, we will explore more channels to control the NPLs. For the interest of not talking about it too much, but generally speaking, as a general approach, we will reduce the NPLs and reduce the NPL ratio.
This is the purpose of our job, and we will evaluate the team performance based on how well you can fight against the NPL, particularly in terms of the risk management. We will analyze what are the reasons for the NPLs and how to absorb, how to get rid of these risks. Ultimately, we will improve the overall quality of assets. Firstly, for the newly issued loans, we will take reference of the downward economic growth. When we issue the loans, we will never allow such a situation that a new NPL happens while we issue new loans. Because the economy is going downward, we have to set up special strategies to cater to this situation.
For the existing NPLs that are sitting in our balance sheet, or for some of the loans that are not NPLs yet, we will conduct a pressure test or stress test to see whether or not they can stand, whether or not we need to increase our credit or asset securitization to handle. For those existing NPLs, we have to categorize all of them to further analyze. Some need to be immediately collected, some need to be transferred or sold, or some to be sold or handled through other measures. We will categorize all of them and analyze all of them so that we can control and manage them respectively. While we issue loans, we will focus on the three measures. The three measures must be conducted simultaneously. Number one, that is the optimization.
There are a lot of reasons accounting for the NPLs, yet it is not that we will not who issues, who collects. In fact, what happens in the past, in the future, there will be professionals for the collection. For example, for the credit cards, we will link that to our credit project. Some must be centralized under the provincial bank. Some will be centralized at the headquarters level. This is centralization. Categorization is also, with collateral, without collateral, or with equity or without equity. We have to look into each case, and we need to be professionalized. Some people, they are good at leasing, they are not good at collecting. We need experts from a legal perspective, from collection, marketization. We have experts of all disciplines. We need to set up a team of experts.
With so many professionals in place, they will help with the collection of such NPLs. Let the professionals do the professional thing. Marketization is another thing we can do. We have collectors. We have to handle these collectors. Some of them, including the capture operations measures, will be adopted. Some of the collectors, we have to follow up with the handling of such collectors. Optimization, professionalization, as well as marketization. These will be the three measures that must be taken simultaneously so that we can improve the collection ratio and improve the recovery ratio. The NPL is also a kind of asset. We have to manage them well. Finally, we have to take different measures at the same time because it is not a simple matter, and it cannot be resolved in a simple way.
We have to link it with our social responsibility. We support their physical, their real economy. Sometimes we need to keep supporting them even though there is an NPL. Sometimes we need to provide a buffer to them, just like a bridge, to help them get out of the difficulties first. For some of the assets, there is still some room for us. Within our balance sheet, we have to look into the picture for each NPL to capture, to adopt the right measure. We have confidence that we can handle the NPLs well. I know that all the analysts are concerned about it. That's why I spent a little bit more time to explain this matter. Thank you.
The last opportunity goes to Hong Kong venue. The fifth row, the gentleman sitting in the middle.
Thank you very much for the management. Barclays Analyst, Wang Yaqin. We noticed that a lot of the big major banks for the non-interest rate revenue is not growing so far. Recently, the central government, as well as the CBRC, also conducted a lot about the discussions, as well as the issues of guidelines and policies on the internet financing. For BOC, for your management, how do you think about how to integrate this new business? Among these major banks, we can feel that it seems that this new business we don't know much about it. It seems that we heard a lot about the IT blueprint. However, for this new business, we haven't heard a lot much.
We just want to know how the management think about this internet financing, how you are going to make use of these new measures to integrate them with your existing products and services.
I would like to invite Mr. Xu to take your question.
I understand that analysts are concerned about internet financing. You are also concerned about how we grow the internet financing in BOC. I think this is quite natural. First of all, internet financing is a hot topic. For a commercial bank, internet financing is also becoming one of the core competitiveness for all commercial banks. It relates a lot with our current business as well as the future growth. Just now you said that the central bank and the CBRC issued policies on internet financing, regulations and policies. I think there are two of them. The first one is about the guideline. The second one is about the online payment. Actually, it is still under drafting. The core concepts of these two policies are three, actually.
Number one, it gives the definition what is internet financing and what business types there are. This is the first message. The second message is that for this internet financing business, who monitor them, who is the monetary entity? And three, what is the bottom line for this business. So what you can do, and what you cannot. Specifically, these are the core messages, the second key messages. The third key message is that what commercial banks can do with internet financing. For those non-banking internet financing, what is the relationship between these two? I think this guideline and the policy gives out the definition, gives out messages in these three aspects. Actually, it is in our benefit. It promotes the healthy growth, and it helps to prevent risks, and protect the consumers' rights.
For the internet financing from a BOC point of view, I can answer you from three perspectives. The three perspectives. Number one, BOC, we take it very seriously. Just like you said before, you may not know enough about what we think about the internet financing because we haven't spoken much. But that does not mean that we have done much or we have done it fully. As a matter of fact, in 2014, in March, we set up a dedicated department that takes care about the planning and management, including the top-tier planning and designing for internet financing. Last year, we also worked out our own guideline for internet financing in the bank. Internet financing will be an important strategy for us, which is also being implemented right now. Actually, you can see we take it very seriously.
The second perspective is that for BOC, internet financing is moving forward very steadily, and we have made progress already. Specifically, number one, the online banking, the mobile banking, as well as the self-service banking. Our business volume grows steadily and rapidly. We have e-channels as well. The replacement of such a channel is 83.4% already. We talk about internet financing without the support of all those channels. There is no way to talk about internet financing the right way. In order to grow the new business of internet financing, we also build up a very typical Internet Plus-based open platform. There are two functions of our internet platform. Number one, it helps to realize the integration and the collaboration with outward. Number internally, it helps with the integration and the integration.
For the outside, it is a collaboration with partners such as e-commerce players, third-party organizations, cross-border organizations, and cross-industry business providers. This platform provides such a link between BOC and other parties. Internally, it encourages convergence in internally our businesses such as the finance markets, the retailings, and so forth can be integrated and merged onto this platform so that we can launch new products and innovative products. Currently, we have already been able to provide 1,700 standard connect t o satisfy customer needs with over 160 products. This platform is open and is being rewarded as the m ost innovative financing in the industry in China. This is a very important infrastructure. From such a platform, we launched six categories of products. All are based on internet financing, including payment, wealth management financing, trading, industry chain, as well as O2O.
Six product categories or six product lines. Currently, we have over 30 products available today. For example, our network deposit. We provide credit services online. Currently, it can provide CNY 57 billion . Our cross-border e-commerce, our market share of the transaction volume already exceeded 270 billion. We are taking a leading position in the market for the BOC E-community. In China, we have over 10,000 communities that already participated in this platform. Through the internet financing, they are able to embed their financing services into the daily life of each community through mobile internet. Actually, it is a very big progress so far, and all the activities are being done gradually. We follow the trend, and we are now the first to do it. However, we are doing better. In the future, we are going to improve this platform and working with more projects.
Meanwhile, in terms of our product line, we are going to further enhance it. In future, we will further enhance our own features of our platform. For example, the cross-border business, the transaction business, particularly the foreign exchange businesses. We will make better use of this platform, just as Mr. Chen said. All the features and the options, and all these innovative derivatives. Especially for the e-commerce community, we are the first to do it, and we want to grow it bigger and stronger. Next time when you are here to analyze our internet financing, definitely you will see more products and more new highlights and new content. Thank you.
Thank you very much, Mr. Xu. Now let's come back to China Venue, Beijing Venue again. The last question goes to the gentleman.
Gentlemen, I am from BOC International, Mr. [Zhang Gang]. I would like to ask two macro-level questions. I see that on the second quarter, I can see that the fee and commission income has been improved compared with last quarter, which is a good performance compared with other commercial banks in China. I would like to know the reasons or the sources of such income increase awards. Also, the CBRC recently has indicated that there will be a room for them to reduce the fees and charges. Are we going to fulfill our social responsibility in this regard, while at the same time to maintain our income? How do you do the balance? What is your take on these fees and charges income on the second half?
Thank you very much. This question is to be answered by Mr. Zhang.
Thank you very much. On the first quarter, we see a huge pressure in terms of the fees and charges income. Well, the reasons are that in the past we have a very good foundation, so that the base is quite high. The second is that the import and export has been troubled from the beginning of the year. That is why we see the charges income from the settlement and clearing have been increased. Third reason is that the exemption of some fees and services fees since the last August has been affecting us. Actually there are two main highlights. I would like to note that our services fee from agency services or fee from the agency services, agency indirect as well as financial products have been quite good. The second highlight is the company and bank card business, which went up by 19%.
Our diversified platform has also been playing quite good and making great contribution to non-interest income. Actually, for the first half of the year, our non-interest income accounted for 32%, which is higher than our peers. Well, along with the internationalization of the RMB as well as the marketization of the interest rate, we are actually facing with a lot of pressures. Well, first of all, I should say that we need to consolidate our strong performance in terms of our RMB settlement as well as foreign exchange services. That is our strength along the history. We have very good team of professionals in this regard, and we have the full confidence in order to do that, especially to seize the opportunity of the RMB exchange rate to form and to expand our finance market business as well as offshore RMB business.
The second is to improve our asset management services in process to develop our asset management fund as well as our financial product services in order to make contributions to the income. The third is to improve our credit card services charge and to increase our income from such aspect so as to offset the damages bringing along by the internationalization of interest rate.
So, thank you very much for answering your question. Based on the time limited, we have to stop here. If you don't have a chance to ask questions, please feel free to contact the secretary team of BOC. We will be very happy to provide you with more details and information. Now, that will be the end of the second half year results. Thank you very much for your long-term support to BOC. Thank you very much. We will keep in close contact. Thank you.