Ladies and gentlemen, good afternoon. I'm Fan Yaosheng, Board Secretary of Bank of China Limited. A very warm welcome to all of you to Bank of China's 2013 interim results presentation. This presentation is being done in Hong Kong, and is audio and video linked to our Beijing venue to ensure that Beijing analysts have equal and simultaneous access to our public disclosures. Before we go into the presentation in earnest, I would like to draw attention to the disclaimer statement. This presentation, together with our 2013 interim report, is now available on our website for downloading. All the financials in our presentation here are prepared according to IFRS, unless otherwise indicated. There will be a Q&A session at the end of the presentation, during which we will allocate time between Hong Kong and Beijing. First of all, I would like to introduce our management team to you.
Mr. Tian Guoli, Chairman. President, Mr. Li Lihui. Executive VP, Mr. Wang Yongli. In today's presentation, we will give you our 2013 interim results and key focuses in the second half. First of all, I would like to invite our Chairman, Mr. Tian, to give you a speech.
Ladies and gentlemen, good afternoon. Welcome to analyst friends to our results announcement presentation. This is the first time I met with all of you. As Chairman of Bank of China, I would like to take this valuable opportunity to establish and maintain good communication with all of you. Today, we have 68 banking analysts from 32 institutions and overseas press in our conference rooms in Hong Kong and Beijing. The development of BOC has received your long-term support and assistance.
I would like to express my sincere gratitude to all of you and hope that you can continue to pay attention to and support Bank of China in the future. I'm here today with President Li Lihui and VP Wang Yongli to brief you on Bank of China's operating results of the first half of 2013. In general, in the first half, Bank of China focused on improving operating efficiency, actively expanding markets, proactively manage and control risks, and achieve excellent results. It is our hope that the results announced today can satisfy your expectations. Next, President Li Lihui will introduce the details of BOC's first half operating results and key initiatives in the second half. After that, I'm happy to have a frank and in-depth exchange with you on topics of your interest.
Thank you, Chairman. Now, President Li, please.
Ladies and gentlemen, many old friends here, a very good afternoon to all of you. The major figures are already released. I'm very happy to be here to walk you through our interim results for the first half of 2013 and key initiatives in the second half. In the first half of 2013, the bank recorded a profit after tax of CNY 4.2 billion and profit attributable to shareholders of CNY 80.7 billion. Basically, a rather satisfactory results. Return on average total assets and return on average equity improved sustainably to 1.3% and 18.93%, respectively. Asset quality remained stable. Provision coverage ratio was slightly increased, and the risk mitigation capability was enhanced. Bank's NPL coverage ratio was 239%, up by 2.7 percentage points. The ratio of provision to total loans of domestic institutions capitalized at 2.62% compared to the prior year-end .
The credit cost was 0.39%, an increase over last year's. Capital base remained solid. Capital adequacy ratio and core capital adequacy ratio stood at 13.33% and 10.47%, respectively. With new measures for capital management being launched, these figures will be subject to fine-tuning. The bank made strenuous efforts to deepen business transformation and structural adjustment, optimize deposit structure, and effectively control funding costs. Please look at these few charts. The group's customer deposits grew by CNY 702.2 billion or 7.7%, compared with the prior year-end , and the proportion to total liabilities increased by 2.2 percentage points. The domestic RMB customer deposits grew by CNY 647.4 billion or 9.2% from the end of last year.
A very important figure is daily average balance of domestic RMB demand deposits grew by 8.4% compared with the prior year-end , and the proportion to daily average balance of domestic RMB customer deposits increased by 2.6 percentage points from the end of last year, which shows that low-cost deposits are now increasing. The funding cost was effectively controlled, with the average cost of domestic RMB and FX customer deposits dropped by 18 basis points and 36 basis points, respectively, compared with last year. Bank c ontinued to optimize its assets structure and increase the proportion of high- value assets. The group's domestic RMB loans grew by CNY 302.3 billion, and domestic FX loans grew by $ 16.1 billion compared with the prior year-end , which was primarily invested in strategic emerging industries, major national construction projects, micro, small, and medium enterprises, domestic consumption, and other key areas.
The bank recorded balance and steady loans growth, and the proportion of group's loans to total assets increased 1.95 percentage points. The growth rate of personal loans was higher than corporate loans. The domestic RMB-denominated personal loans increased by 11.3% from the end of last year, and in proportion to domestic RMB loans, reached 33.5%. Small- and medium-sized enterprises loans achieved fast growth. Small enterprise loans by BOC credit actually grew by 20.5%, and domestic medium-sized enterprise loans grew by 12%, with the proportions to domestic corporate loans up by 0.84 percentage points and 1.33 percentage points, respectively. C oncerning medium-sized enterprises, as I said, the loans grew by 12%, and the proportion grew by 0.84 percentage points and 1.33 percentage points.
In the first half of 2013, net interest margin of domestic RMB business and overseas business expanded by 12 basis points, respectively, which drove up group's net interest margin to 2.23%, 8 basis points higher than the prior year-end. You can see that there are factors driving it up and dragging it down.
As I said, the NIM for first half actually has increased by 8 basis points higher than the prior year-end. For five quarters in a row, the NIM has been on increase by 3 basis points. The bank enhanced its efforts in product innovation promotion, adapting to customer demands, optimized structure of its fee-based business, and increased proportion of non-interest income. In the first half of 2013, non-interest income increased by 24% while net fee and commission income increased by 32.8% year-on-year. Non-interest income represented 33.4% of total operating income, an increase of 2.5% year-on-year. This is the highest figure among all our peers.
Agency commissions, banker fees, settlement and clearing fees, custodian and other fiduciary service fees grew by 6%, 25%, 13%, and 46%, respectively. The bank stepped up in building a multinational banking group and fully leveraged on its advantages in internationalization. If you look at the blue part of the chart, this is the BOC (Hong Kong). Because of market characteristics, their asset scale did not grow a lot in the first half of the year.
As you see in the orange part, that is outside of BOC (Hong Kong), and our increase by 9.62%. Our overseas asset, the blue one, is BOC's growth, grew by 6.89%. The orange part grew very quickly, by 18.71%. This growth is actually quite fast. As you can see, as the first half of the year in all our businesses, our overseas assets actually increased steadily. Our asset size and revenue, and before tax profit, that is increased by 9.3%, 18.7%, and 22.6%, respectively.
The share of total asset overseas is 23.1%. As for profit, that' s 18.7%. This is smaller than before. As you can see, BOC (Hong Kong), because of market reasons, it is growing very steadily. Other international institutions actually grew a bit more. This is something that you might want to pay attention to. The next page, that's the cross-border RMB business. We actually did quite well here. Last year, our total cross-border RMB settlement grew by 63.5% to CNY 1.7 trillion. Since the opening up of RMB settlement overseas, the business volumes has already broke through the CNY 6 trillion mark, and we are in leading position. Our clearing center overseas, using the BOC (Hong Kong) as a center, and also the Shanghai headquarters. All these cross-border RMB clearing system have been built quite well. O ur Taipei branch provided cross-border RMB clearance services.
This is actually a formally designated exclusive RMB clearing bank, providing main channels of RMB businesses in Hong Kong, Macau, and Taiwan. In London, Luxembourg, and Paris, all these branches of ours are pursuing with our clearing services. Also, our overseas RMB business deposit grew by 15.6% and loans by 23.8%. Now the other overseas RMB products, including bond underwriting, trading, cash wholesale, and personal remittance. All in all, we believe that we provide a more comprehensive product mix versus our peers. As for our diversified business, as you can see, in the first half of the year, our revenue grew very quickly to 37.5%. What is important is that our entire group revenue, that as a ratio, grew to 13.6% and contributing a great deal to the growth of the group. This includes our insurance business and our other businesses.
We should say that for these several segments, we are actually growing quite well. Because, for example, with BOCI, it is ranked number five globally, and the grading that's given is A- and internationally is graded at BB B. W ith this diversified business platform, we've been performing quite well. At the same time, we emphasize on the building of our channels and our products. Our e-commerce, e-business grew very quickly. In the first half of the year, our volume is CNY 50.9 trillion, at 24.5% year-on-year growth. The number of customers continue to grow, as you can see from the data chart in here, and also, it includes our better services and better customer experience. Now, on the next page, we would like to discuss our asset quality. As you can see, in the first half of the year, the entire market wasn't particularly good.
The economy is adjusting greatly, but our risk management has been done quite well. As you can see, our NPL ratio has been dropping for the last couple of years. First half of the year is 0.93%, which is a 0.02 percentage points lower than last year. O ur special- mention loan ratio was 2.56%, down by 0.46 percentage points. This is actually in alignment with the market situation. We actually performed quite well in recovering our debts. 59% is cash recovery, and there are several areas, for example, real estate, local government financing vehicles, and other sectors with overcapacities. All these data have been listed here, and we have been controlling the risk quite well. In the next half of the year, our emphasis is in five areas.
First is for structural adjustments for profit. W e seek efficiency from improved methodologies and new markets by operating globally, and asset quality through risk management and growth impetus from infrastructure development. We actually had an important meeting whereby Chairman Tian has been posing a lot of requirements on us. We believe that we will enhance our management quite well and continue to develop our business and return to you a great deal more of value. T hese are our key financial indicators. If you have any questions, you are welcome to raise them.
Thank you, President. It's now time for you to put questions to the floor. Hong Kong analysts will put questions first and then Beijing analysts. Please identify yourself and the organization that you represent. Lady in the first row.
Thank you for this opportunity to put questions to you. I'm from Deutsche Bank. First of all, congratulations to you on your good performance achieved in a challenging environment. A ctually, you outperform expectations. I would like to put a question to Chairman Tian. You are the new leader of BOC. My question is, all along, BOC has been moving towards one particular direction and has been adopting certain strategies and also your core strengths. What is your take on all these? A lso, as Chairman of BOC, what is going to be your focus from now on? How can you make sure that you can lead BOC towards providing even better services to your customers?
Now, concerning what BOC has been doing in the past, BOC has been in existence for over 100 years, and so I don't know exactly which point you want to ask about. My predecessors, I just want to say, actually, BOC has been performing well during the past century, and our predecessors have done a lot of reforms concerning reforming shareholding structure and so on and so forth, and have laid very solid groundwork for BOC to continue to develop and move forward. What they have done was very meaningful to BOC. Now, BOC has come into existence a very long time ago. Now because banking industry has been developing in leaps and bounds. Because we started early, that's why we, in a certain way, were also disadvantaged because w e had to inherit the legacy of older systems.
That said, our predecessors indeed have led BOC towards new heights. Now, without the support of high tech, o f course, banking industry cannot go forward. As for our blueprint forward, even though we may be suffering from the disadvantages of starting early, but we can always start afresh. We can always turn a new chapter, and then everything will start afresh. We have a very solid foundation to move ourselves and break ourselves into internet banking and many new segments of businesses.
From now on, BOC is going to be committed to making all these new moves and breaking into new market segments. All along, BOC has been highly internationalized, and we have accumulated a huge pool of international talents. The internationalization of RMB is accelerating, as you can all see. Interest rate control is relaxing, and interest rate is being marketized. Restriction is being relaxed. This is the environment that we find ourselves in now.
Now, concerning e-banking and computerized banking, we see them as unique opportunities for our bank, because the marketization of interest rate actually is going to work to our advantages. Because all along, our marketized interest rate portion has been the highest among our competitors anyway. Our interest rate, 35% of that is already marketized. We started phasing up to the pressure from marketized interest rate at a very early point compared to our peers. We have learned how to survive in a marketized environment where interest rate is being marketized. Of course, there is going to be even stiffer competition in the market, but it only will work to the advantages of BOC because we are already weathered in this, we are already a seasoned player in this.
Also, in foreign exchange business, whether it is capital settlement and clearance and also anything that has to do with international operation, BOC has a very big leg up there. We 've over 600 overseas outlets. Not only is RMB internationalized, but also China enterprises are being internationalized. We 've got such an extensive overseas network that has been in the process of being built up over the past century. Chinese enterprises that have been present overseas actually are all very closely connected to BOC, and China enterprises are going to become even more internationalized, and so will be RMB. That is why BOC enjoys unique competitive edge here. We are very powerful here. On the basis of that, I'm sure BOC has a very bright future. E-banking knows no boundary and is suffering from no geographical restriction.
Because BOC is so international, that's why it' s uniquely poised to take advantage of this. Overseas financing is also one of our core strengths. Our network coverage is global, and so we have a very huge edge up here. All these three unique opportunities are almost exclusively ours, one might say. We 've got 10,000-odd outlets and branches. Compared to the biggest world banks, maybe we are a little bit smaller in the number, but compared to other marketized commercial banks, actually, we are very, very high in number in terms of our branches. We are actually at a very optimal level. T hese three new techno trends are going to work to our advantages, and it's going to be our unique market edge, and we are not going to let go of them. We definitely will make the most of them. Thank you.
[Non-English content]
This lady in the front, please.
Thank you, management, for this opportunity. My question is perhaps repeated, but for Chairman Tian, can I ask a more specific question? I am Lucy Fung. T he media has been talking about your advocacy of reform in BOC. Does it include risk management and other measures? Do you have any data, any specific targets? Whether h ow is it going to influence your international business?
For specific data, this is internal reform. This is actually our proprietary information. I don't know how you get this information, though. Well, let me just put it this way. I really cannot go into too much specifics. If I tell you, then when I go back, I'm going to get into trouble. Why don't I just share a concept? I think with human resources and institutions, you know they are the same.
It's easy to get fat, just let loose and eat, and just let your desire flies, b ut you will end up with unhealthy status and risks. That applies to big organizations too. If there's a new business and you get a new department, and then if you have another leaders, you don't know where to place him or her, then you have another department. Without knowing, you will get fat. If you have to be efficient, if you want to be efficient, you have to exercise. Just like when a person want to lose weight, if you go for several tens of kilograms in a short moment, then you get into trouble. This is something that you have to do all along, steadily but stably and sustainably. We should not go for any very strong moves, because it will cause a lot of negative impacts.
What is a reasonable standard or reasonable form of leadership number? Well, I guess this is subject to discussion, but all in all, we will place a lot of importance to this, and we will strongly manage ourselves so that we do not get fat. Our management will continue to look for efficiency and effectiveness, because this is about our international competitiveness.
Let me supplement a little bit. Our reform, what does it mean to the cost? Well, we are wanting to increase our overall efficiency. We wanted to go for lower cost and higher output. I believe BOC cost control should be good. We believe that we will continue to keep our cost at a very reasonable cost and competitive level.
Let me say a few more words. Since both of us got here, why don't we just let it go? As far as the answer is concerned, cost is, of course, one area of concern for a company, but the more core concern is efficiency and fast decision-making process. Because if you have a lot of departments, you have blurred responsibilities and roles, and that actually impacts your competitiveness. What is bad is that in the past, we have just too much of a hierarchy. That goes to say that with the reform, we will have a lot of space to grow in the future. There's a lot that we can do to be more efficient. W e do not have any, no specific targets. This is actually an eternal pursuit of ours to try to increase our efficiency as best as we can.
That gentleman.
My question is about asset quality, because we know that in 2009, RMB loans increased by 50%. As a result, overseas investors were worried about this, and that will compress the stock prices. Of course, that is in the past. If you look back on the growth in this part of the loan , how would it impact on the asset quality? Also, excluding BOC (Hong Kong), your credit cost actually is on par with other major banks. Your credit cost actually is on the low side. Concerning the movement of credit cost, coming two to three years, I'd like to know whether you would predict that your credit cost will remain lower than the other major banks.
I refer you to page 12 of the PPT. I would like to say three things. First of all, risk management by BOC is highly efficient. Secondly, asset quality is healthy. Thirdly, loans risk is still manageable. If you look at this chart, our NPL ratio has been continuously decreasing. In the first half, it has increased by CNY 4.1 billion, not too much. NPL has come down to 0.93%, by 2 basis points. Special- mention loans, 2.56%, a drop of 0.46%. Also, our coverage ratio is increasing. It's 230%- odd.
C ompared to several years back, some analysts were pessimistic about BOC, saying that in 2009, our RMB loans increased by about CNY 1 billion and our foreign currency deposits increased by CNY 500 billion, and whether that would cause a lot of problems. History shows, and record shows, that during the past few years, our NPL ratio still is being kept within very reasonable and healthy level.
Starting from last year to first half of this year, economy wasn't doing too well and economic growth was slowing. Also, e conomic structure was being adjusted. Inside of such challenging environment, our asset quality still remains good because, all along, we have been managing our risks very professionally and proficiently. Also, our credit policy and loan policy has been very cautious. Because we've been in the banking business for too long, and that's why we have stopped being very bold and being overly aggressive.
The longer you are in banking industry, the more scared you are and more cautious you will be. Concerning post-lending management and also risk management, and risk classification, we 've done a very, very good job. All of these are focal points, and we have never slackened our supervision over these. Also, in all focal industry segments, our NPL loans have been kept at very low.
For instance, local government financing is very low, and also for capacity industries, CNY 230- odd billion. Also, it's 0.48%. I t is under control. There are two things that you must pay attention to. First of all, in certain minority areas, such as in Jiangsu, NPL is increasing at CNY 170 million. Jiangsu is at the same level. Compared to major banks in those areas, our NPL ratio still is at a low level. Because of these, our minority areas are more externally oriented. Because Jiangsu has got a photovoltaic operator vendor. Because of his default and because of his bankruptcy, our NPL ratio in that particular isolated region has gone up. New NPL ratio in the first half was 0.63%, an increase of CNY 6.96 billion. Compared to last year, there was a rise of 20 basis points.
Also, special- mention loans, an increase of CNY 9 billion, and also overdue loans are an increase of 13 basis points. In face of the present economic challenge, our present asset quality still is within expectation and still within reasonable level. As for looking ahead, for major advanced economies, I think they are starting to turn a corner, although they are doing so in a very slow manner. I think whether it's U.S., Japan, or Eurozone, they have already touched bottom. They cannot go any worse. As for Chinese economy, recent figures show that recovery is now happening. For instance, Macquarie figures and also HSBC figures are saying that the index is now above 50. E conomically, I think China is doing okay. W hat we should be concerned about is developing and emerging economies such as Indonesia and India, and Brazil, and how these countries are going to fare.
Also, the withdrawal of quantitative easing from U.S., how is that going to impact on the world? Whether it's going to bring about a recurrence of very severe crisis such as the likes of 1997, 1998 crisis, we don't know. NPL ratio performance by BOC is, as I said, still within expectations and still within reasonable level. I think for an average bank, a 1% of NPL ratio is a mark of good performance. You cannot expect a bank to have absolutely no NPL because it would mean that the bank is overcautious, overconservative. Five years back or three years back, because in 2009, our business grew very, very fast, and you gave us a lot of negative comment, and we hope that now you are going to give us a positive comment.
The gentleman in white, please.
Thank you, Mr. Fan. I am Liang Jiang. My name is Kevin. I have a question regarding your CAR ratio. In the first half of the year, you are still using your Basel I to calculate. Do you have any plan to convert to a higher level, and what's the time schedule? Can you share with us, in the next half of the year, your CAR? What would that be? A lso, in the next several months, do you have any plans to supplement to your CAR ratio?
Now, allow me to answer this question. With our CAR, a lot of information has been disclosed in the report. You are perhaps concerned that our current CAR when versus the current legislation, it is a bit lower. We have already applied to implement on the higher standards, which is, p er the communications which we are having with the regulators, it may be higher than the current standards by 0.75%.
Our preparations are ready, and we are just waiting for the approvals. As for our CAR, this is something that we have always been very careful about. We have been using different measures to try to manage it. First of all, shareholders' meetings and board of directors meetings have already approved that we will be issuing CNY 60 billion or equivalent foreign exchange second-grade vehicles to supplement with our financing. As a next step, we will also enhance our capital control and test. First of all, we cannot simply do this, support our development by raising capital. We have to optimize our debt ratio. In the first half of the year, as you can see, our NIM is one of, you know, it has been rising, which is quite rare amongst our peers.
This is the result of our efforts to optimize our debt structure. Our total asset, our asset balance, when versus our peer, our risk assets are perhaps a bit higher than them. This is something that we will continue to probe into to see, for those that are higher, that comes with a higher risk. If their return is not as high, then we may do some adjustments. The State Council has just pushed forth an asset securitization program. This is something that we will work on to see how we can use this to adjust our asset structure. We will continue to probe into the after-tax profits, after distribution to shareholders, and how we will be using that to increase our profitability. Also, we would be also looking into new capital tools, and we will perform appropriately according to market situations.
Well, allow me to provide you with some data versus the current status. The CBRC new measures of weighted calculations, it will impact the commercial banks in a different way. It will bring a decrease of CAR by 0.9%-1.2%. Under this context, if you can adhere to the higher standards, then your CAR can increase further by 0.75%-0.8%. I hope that this will relax your concerns about the impact of this on us. Also, when we try to optimize our asset structure and asset quality, we will work very hard and put on further measures.
Now, we go to Beijing.
Thank you. First of all, congratulations on your good performance in the first half. Concerning foreign currency loans domestically in China, what is your overall strategy? Because in the first half, it seems that the NIM has been coming down for foreign currency. It seems that the ratio for foreign currency alone is high. I t is at a low point. C an management enlighten us on your strategic review outcome? Now, concerning domestic foreign currency business, what is going to be your future direction from now on? Secondly, the other categories of deposits are growing well, but fiscal wealth management actually is shrinking. I'd like to know what is your target in this business segment.
Thank you. Concerning NIM and domestic foreign currency loans business, and our strategy for it, i n the first half, as I said, our NIM, compared to the whole of last year, increased by 0.08%. While we optimize our debt structure, actually it would drive up our NIM by 0.05%. O ur optimization of our debt structure actually has driven up our NIM by 4 basis points. Our overseas business has been operating well. As a result, our NIM has improved by 2 basis points. Concerning domestic foreign currency loans business, our NIM has come down by 3 basis points. This, of course, is already included in the PowerPoint. This is our take on foreign currency deposits and loans business, especially foreign currency loans business.
Now, if you look at this in isolation, you will know that its NIM is low, and also its loan and deposit ratio is high. It seems that it is not terribly attractive as a business segment to a bank. However, our take is this. For a customer, his financing needs are very varied. It has needs in RMB business, and also f oreign currency business, and also asset business, and also borrowing business, and also intermediary product service needs, and so on and so forth.
A customer would need us to provide a variety of services, such as investment bank, insurance, and so on and so forth. What we want is to provide a very rich variety of services to satisfy our varied customer needs. We treat each customer as a separate entity. We look at the composite return that this particular customer can generate and say, if we were to take on this customer, how much credit resources and capital resources would it cost us?
From the point of view, from our point of view, as long as the customer can generate a medium to high level of return, then we believe that this customer is attractive . Now, whether we should do more RMB business with him or foreign currency business with him, it is really not a very focal point of ours. Our service is more customer-centric.
In the first half of the year, foreign currency business has low NIM, but other business segments have high NIM. If we look at it across the board, and if we take on this customer that is low in some regard but high in other regard, then when things even out, we can still generate good income and good return. As for fiscal wealth management, now if I remember correctly, I think it's worth around CNY 200 billion. Outside of the charter, it's around CNY 600 billion.
By end July, non-chartered asset is around 31%-32%, and this is well in line with regulatory requirements. We ourselves believe that for wealth management, it's something that a bank must do. O f course, it is required by customers. Regulatory over this segment, of course, is very strict. We are going to be very cautious over this, and we are going to be very professional and very diligent in managing risk to make sure that no problems would occur. The marketization of interests, markets, and also capital market continues to move forward. This is something that definitely will happen. We have to do it, but we have to manage the risk, and we have to meet regulatory requirements. We have to meet shareholders' and investors' needs and protect their interests.
Thank you.
Let me supplement. Concerning wealth management business, I've got the figures. Concerning chartered business, actually is CNY 87 billion.
Next, another Beijing analyst, please.
Good afternoon. I am [Shi Lin Yin from UOB International]. As for June, the interest rates amongst banks shot up, so there were a lot of fluctuations. As of now, we're looking at September, and we're a bit concerned that with the festival's time coming and also with external factors, the liquidity concern would start to become acute again. I'd like to understand about the liquidity with BOC. Also, can you talk about what are the reasonable efforts that you're putting in to manage liquidity.
Just now you talked about June, within the banks, the liquidity shocks, so called. Well, in that process, Bank of China, our management of liquidity has always been stable and there's been no problem for us. Despite the fact that there are some rumors that we were in trouble, that was actually a false rumor, and we have been able to clarify that very quickly. This website actually apologized for what they have said wrongly.
Now, we've been analyzing as to what has caused this. One big reason that we should be concerned about is the foreign exchange deposits fluctuations, which increased very quickly in the first few months. There were CNY 1.5 trillion at that time, so, which means, which offer a lot of liquidity to the banks . Under such a situation, then a lot of funds has been used, and there's been quick increases in wealth management.
There were a lot of growth for interbank businesses such as shadow banking, et cetera. All of a sudden, the market discovered that the market is actually quite not so optimistic, and economy is also very slow. Such as the Document No. 8 and to try to clear up some of the issues and put further limitations. These policies were to try to manage liquidity. As of to May, the foreign exchange deposits growth d ropped sharply, only by CNY 66.8 billion.
That has caused a very sudden shrink in liquidity. This is something that was not fully understood at that time. B y May, the capital became short. Prior to the Dragon Boat Festival, when cash is needed, then the problem became quite acute. As you can see, on June 6th, there was a very sharp rise in interest rate. A fter the festival, it was a bit relaxed. We have been using this liquidity as the way that we used to do, the industry used to do. A fter several days, we saw a 14% of interbank rate. T hat is, for any individual deals, it went up, shot up to almost 30%. A fter the measures that has been put forth, we have been able to stabilize that.
Since this so-called attack of liquidity in June, this is an issue that the industry has become aware of. The industry has been carefully managing the source of the funds and liquidity flow. T hey are using a lot of foreign exchange tools to try to adjust the market and liquidity. We believe that despite the fact that this remains something very important and needed attention, we are more prepared than before, and you should not be overly concerned that the same problem would recur.
BOC has always been very attentive to the growth trends of foreign exchange deposits, especially when our share of the market is quite big too, in this segment. We constantly try to anticipate our own changes as well as market changes and be prepared ahead of time. W e are confident that BOC can continue to be quite prudent and safe in managing this one.
Last question from Beijing.
My question has to do with interbank situation. In the second half, interest rate marketization is going to speed up, and major banks are going to move into this segment. Also, deposit and loan, the ratio of BOC has been on the high side. What kind of this new development, what impact has this kind of development on your future strategies, on your future challenges and opportunities? What are going to be your way forward?
T his is about term deposit certificate and basically is within one year or at one year. BOC, of course, is very experienced, but we focus so far on overseas. Starting from 2012, we have the issuance of this, worth $54 billion in this certificate and CDs. It is U.S. dollar-denominated, Hong Kong dollar-denominated, Singapore dollar-denominated, and New Zealand dollar-denominated, and so forth.
We have accumulated experience in this. We believe that this CD business is going to be very helpful in optimizing our debt structure to a very significant extent. We 're going to actively move on this. We believe that domestically, in China, the conditions are already ripe. Because of the marketization of interest, the CD business definitely is something that is bound to happen. We have already made a formal application to People's Bank of China to move into a CD business. We want to issue CDs for three months, six months tenure. As for to what extent would People's Bank of China approve us to move into this business, or what kind of amount would they approve us to do? We don't know yet, b ut we want to move into this market in a very big way.
We want to create even better situation in the market for our bank to generate even better return for our shareholders. Because with the marketization of interest rates, CD business definitely is looking up.
Because we are pressed for time, probably, we have no more time for questions. If you want to get in touch with BOC, you are welcome to do so.