Dear investors, analysts, good morning. CMB 2024 I nterim results presentation will now begin. I am Securities Representative of China Merchants Bank and General Manager of the Office of the BOD, Xia Yangfang. CMB has announced its twenty twenty-four interim results last Thursday evening. Today's event is being conducted via live streaming. I would like to now introduce the members of the bank's senior management who are with us today. They are Mr. Wang Liang, President and CEO, Mr. Zhong Desheng, Executive Vice President, Ms. Wang Ying, Executive Vice President, Mr. Peng Jiawen, Executive Vice President, CFO, and Secretary of the BOD. We have also invited independent non-executive director, Mr. Shi Yongdong, attending the event online. On behalf of China Merchants Bank, I would like to welcome you all to the conference, and thank you for your long support and interest in and investment in CMB.
In today's presentation, we will have two sessions. The first session will be given by Mr. Wang Liang to review our financial highlights, and the second session will be a Q&A session, which lasts around ninety minutes. Simultaneous interpretation in English will be provided for both the sessions. Now, I would like to give the floor to President Wang on the introduction of the 2024 interim results.
Hello, everyone. Good morning. Welcome to CMB's 2024 interim results presentation. Today, my presentation will be divided into three parts. First, is an overview of the first half of 2024 performance. Second, it is about specific operational information. And finally, we will briefly address operational strategies for the second half.
In first half, the group took the strategy of building a value creation bank and promote high-quality development, and carry out various business activity in a sound manner, achieving dynamic balance, development of quality, profitability, and scale, which was mainly reflected in the following six aspects. First, the group pursued progress amid stability and maintained sound profitability. In the face of unfavorable factors such as narrowing interest spreads, declining rates, and insufficient effective credit demand, the group took proactive measures to respond, and key profitability indicators, such as operating income and net profits, remain resilient. Net operating income amounted to RMB 172.92 billion, decreased by 3.11% year-on-year. Net profits attributable to the shareholder of the bank, RMB 74.74 billion, decreased by 1.33% year-on-year.
ROAA and ROAE were 1.32% and 15.44%, decreased by 0.13 and 2.11 percentage points year-on-year, respectively, maintaining its leading position in the market. NII was RMB 104.45 billion, representing a year-on-year decrease of 4.17%. Given a continued decline in return on assets and a continued trend towards time deposits, the asset and liability management has been continuously strengthened. The NIM was 2%, representing a year-on-year decrease of 23 basis points, which was still a relatively good level in the industry. Non-interest income was RMB 68.47 billion, representing a year-on-year decrease of 1.43%.
Affected by the continuous impact of fee reduction, capital market fluctuation, and the decrease of customer risk appetite, net fee and commission income was RMB 38.33 billion, representing a year-on-year decrease of 18.61%. We seized the market opportunity of bonds investment. Other net non-interest income was RMB 30.15 billion, representing a year-on-year increase of 34.71%. Affected by a decrease in operating income, cost to income ratio was 29.75%, increased by 0.68 percentage points year-on-year. As the operating income remain under pressure, we adopt lean management to control the cost and achieve cost reduction and efficiency enhancement. On one hand, we ensure fintech input and input in key regions and key areas. On the other hand, basic expenses such as premises, operations, equipment, administration, were further reduced.
We also actively promote green and low carbon operations. Initial results were seen in expense control, with operating expense decreased by 0.05%. Second, we continue to optimize and improve efficiency of asset allocation. We strive to overcome challenges of insufficient effective credit demand and take multiple measures to strengthen asset origination and maintain reasonable and stable proportion of high-yield assets. Total assets was RMB 11.57 trillion, representing an increase of 4.95% from the end of the previous year, among which total loans was RMB 6.75 trillion, an increase of 3.67% from the end of the previous year and accounting for 58.3% of the total assets remain at high level. We grasp the pace of bond investments.
The volume of it increased by 2.95% from the end of the previous year. We strengthen coordinated management of the interbank assets and bill assets. Interbank assets increased by 42.78% as compared with the end of the previous year. The discounting balance decreased by 7.71% as compared with the end of the previous year. Thirdly, we enhanced liability management and maintained funding cost advantage. We promote the growth of low-cost core deposits, strengthen deposit cost control, advance the growth of high-quality deposits, and maintain our core advantage of low-cost liability. Total liabilities were RMB 10.46 trillion, representing an increase of 5.18%. Among them, total deposits, RMB 8.66 trillion, representing an increase of 6.22%.
Average daily balance of core deposits increased by 4.42% compared with the previous year, accounting for 86.2% of the total. Average daily balance of demand deposits accounted for 52.32% of the total, representing a decrease of 5.70 percentage points. Cost ratio of interest-bearing liability was 1.72%, increased by one bp year-on-year. Among them, average cost ratio of customer deposit was 1.6%, decreased by two bps year-on-year. Fourth, we consolidated structural advantages and maintained high proportions of non-interest income. We continue to optimize business structure and income structure, with retail business accounting for over half of the value creation, and the proportion of net non-interest income increased in a steady manner.
Balance of retail loans was RMB 3.54 trillion, an increase of 3% from the end of the previous year and accounting for 52.48% of the group's total. Retail business, with its proportion of net operating income and profit being 55.48% and 57.11% respectively, continued to serve as a Balustrade of the group's business. Net non-interest income accounted for 39.6% of net operating income, with a year-on-year increase of 0.67 percentage points. Fifth, we maintained stable asset quality and strong risk compensation capability. NPL balance totaled RMB 63.43 billion, an increase of RMB 1.8 billion as compared with the end of the previous year. NPL ratio 0.94%, a decrease of 0.01 percentage point.
Annualized credit cost ratio was 0.77%, a year-on-year decrease of 0.11 percentage point. Allowance coverage ratio was 434.42%, a decrease of 3.28 percentage point as compared with the end of the previous year. Allowance to loan ratio 4.08%, down by 0.06 percentage points, remaining at a high level. Sixth, the group sustained a robust capital strength with continuous endogenous growth. The Core Tier 1 CAR, Tier 1 CAR, and CAR under the advanced measurement approach were 13.86%, 16.09%, and 17.95%, respectively, an increase of 0.13, 0.08, and 0.07 percentage point respectively, as compared with the end of the previous year.
So under the weighted approach, Core Tier 1 CAR, Tier 1 CAR, and CAR were 11.64%, 13.51%, and 14.6%, respectively. It would be increased if eliminating the effects of annual cash dividends. The second part is about the following information. In the first half of the year, the company made progress while maintaining stability in terms of its business development. The three fundamentals of customer base, asset quality, and market share were more solid. It was mainly reflected in the following five aspects. First, the company continued to expand customer base with more solid customer foundation. We adhere to the core value of being customer-centric and creating value for customers, and further enlarge the basic customer base, deepen the operation of the value customer base, and achieve remarkable results.
Retail customers was 202 million, an increase of 2.54% as compared with the end of the previous year. Among them, number of Golden Sunflower and above customers was 4.996 million, increase of 7.67%. Number of customers holding wealth management products was 54.73 million, an increase of 6.52%. Active credit card users amounted to 69.35 million, a decrease of 0.59%. Corporate customers totaled 2.974 million, an increase of 5.46% as compared with the end of the previous year. Among them, newly acquired corporate customer was 255,000. Number of customers for withholding transaction was 1.19 million, with a year-on-year increase of 13.19%.
number of SciTech enterprise customers was 144.9 thousand, an increase of 5.8% as compared with the beginning of the year. And second, we achieved balanced development of four major segments with more distinctive business features. Retail finance business, in terms of it, we focus on the basic needs of customer in deposit, loan, and remittance, and continue to improve customer service system, strive to be the principal bank for settlement and the principal wealth management bank for customers and further consolidating our leading position. Retail AUM, AUM from retail customers surpassed RMB 14 trillion, achieving RMB 14.2 trillion, representing an increase of 6.62%, among which AUM from Golden Sunflower and above customers increased by 7.03%. Deposits from retail customers increased by-...
8.52%, and accounting for 43.14% of the total deposits, an increase of 1.04 percentage points. Under the circumstances of weak demand from residential mortgage loans and credit card loans, the company proactively adjusts the loan structure and achieve steady growth, representing an increase of 2.98% as compared with the end of the previous year in terms of the retail loan. We deepen the cooperation strategy of stability and low volatility of the credit card business. Operating income of the credit card business was RMB 44.708 billion, with a year-on-year decrease of 1.17%, and the transaction value was RMB 2.21 trillion, remaining the leading position in the industry. For corporate finance, we further refined and strengthened to develop new advantages of featured finance.
FPA to corporate customers totaled RMB 5.99 trillion, representing an increase of 7.61% over the beginning of the year. In response to the policy of national industry upgrading, the growth rate of loans in key areas such as high-tech finance, green finance, inclusive finance, and manufacturing finance was higher than the average of the loans granted by the company. Retirement finance business was regarded as the strategic business of the group. With continuously increased improvement of resources, we have issued a total of 68.89 million electronic social security cards, an increase of 10% as compared with the end of the previous year. We provided entrusted annuity and account management service to more than nine thousand enterprises, and the number of accounts under management reached 2.21 million.
Pension funds under custody amounted to RMB 1.17 trillion, an increase of 11.43%. Transaction banking business was actively integrated into the digital transformation of enterprise. Domestic trade finance business volume increased by 12% year-on-year. The focus on the characteristic cross-border customer groups provided one-stop solutions for the global operation of enterprises. Cross-border finance recorded $258.11 billion of international BOP for corporate customers. We pursue professionalism and innovation in investment banking and financial market, gave full play to the characteristic of integrated operation of IB and CB, and provided three-dimensional, all-round, and multi-level financing support to clients. We continue to build our unique advantages in IB business and strengthen our ability to serve the real economy.
Debt financing instruments with us as the lead underwriter recorded a year-on-year increase of 11%, ranking third among our peers. We strive to build differentiated competitive edges in the financial market and provide tailored solutions against financial market risks, such as exchange rate and interest rate risk faced by enterprises. Transaction volume of RMB bond investments recorded a year-on-year increase of 17.39%, and transaction volume of client flow tradings with wholesale customers recorded a year-on-year increase of 11.66%. We focus on interbank clearing, settlement, and depository business scenarios to expand sources of low-cost liabilities. We partnered with 107 security companies and third-party depository service, and served 17.14 million customers, an increase of 3.13% as compared with the end of the previous year.
Wealth management and asset management business, we continue to further expand and strengthen. We actively grasp the needs of residents and enterprise for wealth preservation and appreciation, and improve our asset allocation capabilities. Balance of retail WMP amounted to RMB 3.76 trillion, an increase of 7.3%. Agency distribution of non-money market mutual funds and premiums from agency distributions of insurance products increased by 89% and 11% respectively, year-on-year. Average daily balance of corporate WMP increased by 14.59% as compared with the previous year. Under the three asset allocation service, the number of customer-conducted allocation under it reached 9.98 million, an increase of 9.35% as compared with the end of the previous year. We continue to improve our professional capability in asset management.
Business scale of asset management amounted to RMB 4.46 trillion, which remained basically stable. Asset custody business made new breakthroughs, with the balance of assets under custody reaching RMB 22.06 trillion, an increase of 4.45%. Thirdly, we accelerated development in key regions and continued to improve synergies within the group. Facing the low interest rate environment, we expand new areas, develop new advantages, and promote the branches in key regions to improve quality and efficiency. We also enhance the competitiveness of subsidiaries that upgrade value contribution to achieving positive operating results. For branches in key regions, their growth rates of value customer, core deposits, AUM, and other net operating income were higher than the average of the bank. Our Hong Kong subsidiaries and branches develop in a steady manner.
CMB Wing Lung Bank gave full play to the full license advantage, continued to improve comprehensive service for customers, and realized a total assets of HKD 447.03 billion, increase of 4.78%. Hong Kong branch of the company achieved net operating income of HKD 1.59 billion. CMB International Capital recorded net profit of HKD 871 million, year-on-year increase of 6.74%, with its IPO underwriting share ranking top in the Hong Kong market. The company's subsidiary developed in a sound and healthy manner. The balance of WMPs under the management of CMB Wealth Management amounted to RMB 2.44 trillion, a decrease of 4.31% as compared with the end of the previous year, maintaining leading position in the industry.
The scale of asset management business of CM, China Merchants Fund increased by 3.87%, and total assets of CMB Financial Leasing increased by 8.8%. Fourth, we strengthen comprehensive risk management and prevent risks in key areas. We made strict classification of assets, fully exposed risks, persistently reduced and disposed of risk assets, and effectively managed all kinds of risks, including credit risk, market risk, liquidity risk, operational risk, and compliance risk, maintaining stable asset quality across all business. Retail NPL ratio was 0.9%, a slight increase of 0.01 percentage point from the end of the previous year. Corporate NPL ratio was 1.13%, a decrease of 0.06 percentage point from the end of the previous year.
Newly formed NPLs amounted to RMB 31.9 billion , an increase of RMB 1.4 billion year-on-year. Annualized NPL formation ratio was 1.02%, a decrease of 0.02 percentage points year-on-year. The ratio of NPL balance to the balance of loans overdue for 60 days was 1.14%. The company closely monitor changes in the situation and continue to strengthen risk prevention and resolution in key areas. Corporate real estate loans, the balance of it was renminbi 303.9 billion, remaining stable. NPL ratio was 4.78%, a decrease of 0.23 percentage points from the end of the previous year, making a decline for four consecutive quarters. In terms of manufacturing loans, we closely monitor industry capacity changes, dynamically adjust and optimize industry credit policies.
The NPL ratio for the manufacturing industry was 0.48%, a decrease of 0.05 percentage point from the end of the previous year. In terms of retail loans, we closely monitor trends in risk changes, continuously select high-quality customers, and maintain overall good asset quality. NPL ratios for residential mortgage loans and microfinance loans were 0.4% and 0.63% respectively, up by 0.03 percentage point and 0.02 percentage point respectively. NPL ratio for credit card loans and consumer loans were 1.78% and 1.04% respectively, representing an increase of 0.03 percentage points and a decrease of 0.05 percentage point from the end of the previous year. Fifth, we adhere to innovation-driven development to build digital CMB.
We enhance exploration of cutting-edge technology applications with AI plus finance as the key focus, shifting from online CMB towards smart CMB. We continue to implement the AI plus finance strategy. In customer service, the intelligent wealth management assistant, Xiaoxiao, was evolving into a listening and responding bank assistant, significantly enhancing its service capabilities. Internally, we advanced the application of AI large model within the bank scenarios. We continue to develop the new service model of people plus digitalization, with CMB app and the CMB Life apps MAU totaled 117 million. The online processing rates for financing business and foreign exchange business continue to improve. We strengthen internal intelligent applications. Over 500 operation process completed intelligent transformation and applications, with process efficiency of key businesses increased by 56%.
The workload equivalent to 16.33 million working hours that was completed by intelligent application, up 36.72% year-on-year. We fully leverage the benefits of cloud infrastructure and further explore data potential. We deepen the construction of data middle office and technology middle office to enhance R&D efficiency, lower data application thresholds. Big data service covers 60% of the employees in the bank. Finally, I will briefly introduce our business strategy for the second half of 2024. At present, the external environment is characterized by intertwined trends, cyclical, structural, and policy factors, leading to increased uncertainty for the banking industry. First, the macro environment is complex and changing. Since this year, China's economy has continued to pick up.
However, the external environment has brought adverse impacts, such as insufficient effective credit demand, differentiated economic operations, numerous risks and potential risks in key areas, and the shift from old to new growth drivers involves difficulties. In the second half, macro policies will continue to play an important role, strengthen countercyclical adjustment, and carry out reform as a driving force to promote steady growth, structural adjustment, and risk prevention, which are conducive to the positive trends of economic recovery. Second, the banking industry faces both challenges and opportunities. In the face of challenges such as lowering interest rates and declining fee rates, and the interest rate spread of the banking industry has been narrowing and the profit has been under continuous pressure, bringing a major test to the sustainable development of banks.
Meanwhile, the government's measure of promoting Chinese-style modernization, developing new quality productive forces, and advancing high-level opening up, generates a large number of market opportunities. Residents and enterprises have strong demand for wealth preservation and appreciation, and extensive wealth management business still has a broad space for development. Third, technological revolution has accelerated industrial differentiation. Represented by AI, the technology revolution has driven the transformation of the banking industry to be digital and intelligent, resulting in intensified industry differentiation. With strong strength of technology development, we'll rely on technology innovation to lead innovation in products, service, models, and management to realize earlier transformation and adapt faster to the future development.
In the second half, the group will adhere to its strategic goal of building a value creation bank and continue to promote high-quality development, driven by the dual engines of adopting strict management, upholding fundamental principles, and breaking new ground. We will maintain our strategic focus, consolidate advantage, and tap into the potential to strengthen, improve, and expand our service to the real economy, thereby creating greater value for our customers, employees, shareholders, partners, and society. First, we will maintain our strategic focus and continue to build differentiated competitiveness.
We will consistently adhere to a differentiated development strategy to sustain our market-oriented vitality, and firmly stick to the strategic position in retail finance, consolidate and expand the systematic advantages of retail business, and accelerate the development of corporate finance, investment banking, financial markets, wealth management, and asset management segments in order to better meet the multilayered and diversified financial needs of the customers. Second, the company will improve its operational efficiency and effectively strengthen value creation capabilities. We will return to our original focus to expand, strengthen, and improve the customer base, and promote the long-term sustainable growth of the three fundamental business: asset, liability, and intermediary business, so as to improve the returns of all business segments.
We will actively cultivate new business and new advantages, continue to improve the development of key branches in key regions, improve the service capabilities of overseas branches and subsidiaries, and give full play to the synergistic effects of comprehensive operations, and accelerate to form a new growth momentum. We will strictly, thirdly, guard against risk, protect bottom line, and enhance comprehensive risk management capability. We will uphold a steady and prudent risk culture, solidify the foundation, and effectively implement risk management. We will respond closely to changes in the risk landscape, rigorously control risk in key areas, and firmly maintain the fundamental quality of our assets. We will, fourthly, reinforce strict management and improve sustainable development capabilities.
We will enhance refined management of costs, make efforts for sound management of funding cost, operating costs, risk costs, and capital costs, and improve the scientific, refined, and digital level of internal management, and with an aim to establish a long-term mechanism for cost reduction and efficiency enhancements. Fifth, we will insist on upholding fundamental principles and breaking new ground to fuel high-quality growth. We will insist on ensuring technological input, focus on cultivation of digital talent, and promote digital transformation. We will keep pace with the wave of the AI, accelerate the research and application of large language models, speed up the release of benefits of data assets, continue to lead innovation in model business, products, and management through technology innovation, and deepen the dual empowerment of people plus digitalization and technology plus business in order to create a new moat for the future development.
This is my introduction. Thank you.
Thank you, President Wang. Now we will enter into the Q&A session. Please follow the instructions given by the operator to raise questions, and please introduce your name and the agency you represent before you raise the question.
Please press "More" to raise your hands on your mobile phone, or press the button "Participants" on your computer. And today, we have many participants, so please raise only one question each time, and to state your name and the institution that you represent before your question. The first question is coming from CITIC Securities, Ms. Xiao Fei Fei.
Thank you for giving me this opportunity. My question is about the business model. We found that the growth rate of your loan at the end of June is a little bit slower than in the first quarter. So against this backdrop, what is your strategy for expansion of your asset book? And are you expecting to slowing down your growth rate of your assets? And is your target for loan growth this year continue to be 8%-9%?
If you want to slow down your asset growth rate, how can you balance the relationship between capital adequacy ratio, the asset and liability structure, as well as the profit growth? And in the future, whether you will lay more emphasis on returning more to your shareholder. Thank you.
Thank you for your question. And before answering your question, I would like to extend my thanks to all the participants today. And last Thursday, we published our semi-annual results, and I saw many reports and analysis about our report, and I thank you for all your suggestions and that you have posted in your reports. And there are many questions raised by investors this time, and I would like to share with you my views on our developments currently. I think there are three major characteristics.
The first one is we are even more clearer in terms of our targets, and our target is to become a value-creating bank, to create value for shareholders, employees, our cooperators, as well as our society and our shareholders. So this is the goal of us, namely to build a value-creating bank to support a long-term growth. Secondly, I think we are having a steady pace of growth. In order to reach the goal of value bank, we emphasize on efficiency, asset quality, as well as the asset size growth. We want to keep a balance among different business sectors, namely four major business sectors, including retail, the corporate investment banking, and asset management and wealth management, and we have achieved quite good results in this regard. Thirdly, we think that our foundation is even more solid than before.
We continue to consolidate our foundation for business, for management, and also for our talent teams. And we have reinforced our first in this regard, so as to support the long-term growth. And fourthly, we think that in the first half of the year, we are stronger in terms of our financial statements. Our asset quality is still fine, with a low risk rate, and we have quite a high coverage ratio, over 430%. And we continue to grow our capital endogenously, so that we can offset the unexpected risk, and also to support our business growth. And actually I didn't directly answer your question, but I would like to share my views on these four aspects. I would like to say that we are strengthening our capability so as to sustain our long-term development.
Also, this year, we also say we want to reinforce our internal management and to reinforce innovation so as to drive our growth in the future. These are all the ways that we want to tackle with a low interest environment, and also to tackle with an external environment with even more unexpected factors. This will help us to keep healthy growth. Just now, your question was about whether we want to slow down our growth rate in terms of asset and also in terms of loan, and how we can strengthen our asset allocation to sustain a stable growth and to optimize our asset and liability structure. Just now, I share my philosophy of management with you.
I think we will continue to stick to the principles, namely under the backdrop with less effective demand and also facing the pricing of loans coming down. And also, we are facing quite a fierce competition among peers, and our banks are trying to lower down the loan price so as to compete with each other. And CMB will stay firm to our strategy and to be rational in terms of asset growth, so to strike a balance among asset size, efficiency, as well as asset quality. And these are continue to be our principle, namely, asset quality will be the first top priority, and then we will place profitability, efficiency before asset size growth. And this is our main philosophy about how we go around with our asset growth. And with this principle, we think in terms of asset allocation, we will continue to optimize that.
And very importantly, we will expand our customer base and to ensure the asset quality is stable and optimize our loan structure, and also to maintain our advantage in terms of retail loans. Retail loan will continue to be the backbone of our loan book. And in terms of corporate loan, I think we will also continue to improve, increase our loans in terms of the manufacturing green loan, but with a precondition that the risk will be under control. And currently, we're facing a problem now with less effective demand, so we will also increase our investment into bonds for interest rate bonds, and also credit bonds, so as to supplement that less investment in loans. And also, at the same time, we will also increase our interbank assets.
placement with these, non-bank financial institutions to, at the same time, ensure the profitability and ensure the stable long asset size growth. So that just means that at the same time, to ensure asset quality will be guaranteed, and also at the same time, we'll go continue to ensure us to achieve a stable NIM as well as, asset growth. Second question, please.
Second question is from Mr. Xu Richard from Morgan Stanley.
Thank you for giving me this opportunity. I got a question for mortgage. The Bloomberg had a news that it might be possible there will be a refinancing scheme for a mortgage or lower down the existing mortgage again. So what will be the impact on CMB, and how CMB will cope with that?
Thank you for your question.
For this refinancing of mortgage, we also learned the news from the media, but we haven't got any official notice from PBOC or the Financial Regulatory Authority. They haven't consulted us. I think that we don't have any clearance or confirmation about this news. These are only media reports. But I think if this policy is rolled out, this will definitely have some negative impact on the rate on the existing mortgage. I think the regulators will study the policy, the impact on the study, and they will do it in a prudent way. Thank you. Next question, please.
Next question is from Gary Lam, from HSBC.
Thank you. I'm Gary from HSBC. My question is about asset quality.
In this quarter, I think CMB's asset quality is stable, but many other bank peers asset quality, we are seeing quite big rise in terms of non-performing loan or non-performing loan rate. So could you please share with us your views on asset quality, including your retail assets or corporate assets?
Mr. Zhong will answer this question. Thank you.
As for asset quality and also the forward-looking of our asset quality, I would like to share my views on that. In the first half of the year, we stick on our strategy of value-creating bank and stick to the principle to have a coordinated development between asset quality, efficiency, and also scale. We have maintained a stable asset quality by the end of June. Just now, Mr. Wang has give you a review in his presentation.
If we look at the structure and also dynamic change of our asset quality, I would like to give you some details. In terms of corporate banking, and we select customers in a stable, prudent manner, and corporate banking asset quality is stable. By the end of June, the NPL ratio is 1.13%, and it's down by 0.06 percentage point. And also, NPL formation rate has also declined compared to the end of last year. And the industries which have a higher NPL ratio also have seen their NPLs decline, including manufacturing. And it's down by 0.05 percentage point compared to last year. And also for the transportation industry is 0.27% NPL ratio, is also down compared to the end of last year.
And also, property industry is also down by 0.03 percentage point compared to the beginning of the year. So as you can see, it's quite stable. In terms of retail banking loans, it's also one of our featured business. And first, we have a sound customer base, and it's highly diversified. And our retail asset quality is also stable, with NPL ratio 0.9%. But for sure, we have seen in the first half of the year, the special mention loan ratio and those overdue loan ratio has all increased a little bit. I think this is also the same trend with the industry. But for special mention loan and overdue loan, I think there are two factors. One is objectively and one is subjectively. In a more objective way, we can see that, like in corporate banking, some industries-...
has been affected by economic downturn, and we have seen cash flow problems in customers in some industries. We are seeing some customers, they have overdue. Like in the customers in the property sector, just as I mentioned, as we are seeing continuous adjustment in the property sector, and the sales volume hasn't recovered yet, so it definitely have some impact on the customer's cash flow. And this is one of the factors. In terms of corporate banking, we have seen overdue loan on special mention loan ratio has also increased a little bit. SML ratio is up by 0.07%, and also overdue loan up by 0.08 percentage point compared to the beginning of the year, but it's still quite stable.
Some of the individual customer also have seen difficulty for repaying back the loan. It's also the same as they have their subjective factors. Like for some credit card customers, we have done tailor-made, or kind of the installment payment scheme for some individual customers, and we reinforced our risk classification or marked this kind of customer as overdue or special mention. This is because we strengthen our risk management internal risk classification internally. This is about what we have in the first half of the year. If we look into the second half of the year, and we think that there are many complexities and changeable factors in our external environment, so risk arising. We have done investigation and also stress test for our asset quality.
And in the second half of the year, we are confident we can continue to maintain a stable asset quality. Overall speaking, I think our asset quality will be in a stable manner. The main rationale behind that are as follows: namely, why we can maintain a stable asset quality. Firstly, we have a prudent and stable risk culture. We continue with this culture. Secondly, in terms of asset structure and also customer structure, we continue to have our advantage, and we continue to dynamically adjust that. This ensure that we have a solid foundation for our stable asset quality. And actually, we try to build up our risk capability so that can go through cycles and to face the future. That is why we have a higher proportion of our retail loan. Just as Mr.
Wang has said that retail loans still accounted for over 50% of the total loan book, and retail loans are highly diversified and more collateralized. Retail customers are more. We have a more quality retail customer, so which means that we are more risk resilient and can guard against the risk and can go through cycles. In terms of corporate banking from the beginning of this year, we continue to deepen our understanding about industries. We emphasize on 13 industry clusters and to do our loan business. The 13 industry clusters are highly emphasized also by the national strategy, and it's more targeted and industries which have potential in the future, like the new productivity.
For industries that is more affected by cyclical factors, we also have an intensified risk management for these industries. So we have diversified different industry policies for different sector to ensure that we have continued to optimize our asset and customer structure. And thirdly, in terms of risk disposal and risk mitigation, we're stepping up our efforts, such as in the property sector. For newly increased business, we have diversified business. We emphasize on quality regions, quality customers, and quality projects. For existing projects, property projects, and I think risk management is the top priority. We have tailor-made risk management measures differ for each project and each customer, we are accelerating risk mitigation for projects with a potential risk.
As you can see, we have a lower proportion of property loans in the total loan book, and also our asset quality is stable. As you can see, the proportion of our property loan in our total corporate loan book is 12.26%, lower from the level at the beginning of the year. Also, NPL formation for property loan is also coming down, and the coverage ratio for property sector is much higher than the average coverage ratio for corporate loan book. It's a sufficient loan book, sufficient coverage for that. For the local governments, we are seeing that it's also stable. Local government financing vehicles is also stable, and we are continuing to optimize the loan structure for this kind of LGFV business.
So we have a very sound asset quality with a very, very low NPL ratio. And this is mainly because we have classified and diversified risk management for this kind of LGFV customers, and our credit policy for different regions are also different. As for small and medium-sized financial institutions, we are very prudent on that. For our own balance sheet business, we don't have any NPL. So these are the major areas I would like to emphasize on. And fourthly, we continue to consolidate our risk management system and also to improve our approach and also capability in this area. And we think that we are more effective in this regard and more forward-looking, when we continue to improve our capability on that front. And fourthly, we continue to dispose NPLs as well.
In our first half of the year, we have disposed around RMB 13 billion-30 billion NPL assets. It's up by around RMB 2.2 billion. So it means that at the same time, when we are optimizing our asset quality, and we are disposing the existing NPLs as well. So I think that looking ahead, we will continue to stick to our strategy, and risk will remain the top priority and maintain a stable asset quality to make sure that our asset quality will be stable and sound.
Next question, please.
The next question is from CICC, Mr. Wang Ziyu.
Thank you, senior management, for giving me this opportunity. I am the analyst from the banking industry from CICC, Wang Ziyu. I have a question about wealth management. For the past two quarters, we see that the client number and AUM growth of CMB wealth management has hit the bottom and rebounds. So we also see an announcement from CMB about the active fee reduction in the mutual fund product. So I would like to understand that what internal improvement that CMB has been made during the current capital market situation, and what is your mindset behind the active arrangement of fee reduction?
So that our wealth management business for this year, for the customer base and AUM growth is we see very good performance. That's the fundamental of wealth management business. For customer base, our the retail customer number has remained steady growth, especially the customer base quality improved a lot. For debit card, the Gold Card and above customers' growth rate was 6%, higher than the average growth rate of 3.7% and last year's growth rate of 5.3%. For credit card users, up by 4.2%, and also we see higher user activities of the two app, and our MAU has achieved 117 million, up by 18%. To see from the customer base level, we stick to a sustainable acquisition of customer. Payroll customers and high level of activity customer will be our focus.
And also, we satisfy our clients' needs in terms of remittance and loan and some basic other needs. We also pay attention to the inclusive financial needs of our customers and build a better product delivered to our clients. And, also, we deliver better products based on cross-border finance, retirement finance, and other special services that we deliver to our customers. The second part is that our AUM has experienced a very good growth, hit a historic height for the past three years, achieving RMB 14.2 trillion. We see even more balanced structure in terms of our AUM. Non-deposit AUM growth has accounted for 67% of the total, up by 11% year-on-year.
... and we see even more balanced structure, for instance, in wealth management product. Net wealth management products increase, increment increased by 73%. And for the past year, we see that negative growth in the past year of around 53% in the one-month maturity non-money market fund products. And we also see increase in many more aspects. AUM increased by 22 basis points. Mutual fund increased by 93 basis points. This is what we have built as a strong base in terms of customer and in terms of AUM. How do we make such improvement in terms of our wealth management business? Firstly, we continue to promote the three asset allocation service system. From the asset management perspective, we transform our perspective to provide services to customer through the three asset allocation system.
We've done a lot in terms of building the underlying model to recognize customer portrait, to allocate assets scientifically, and to provide quantified services to deliver wealth management services. We have also provided scientific and data-based services through our relationship manager to deliver to our clients, and third, we make sure that relationship managers can provide standard services to our clients based on our unified service model. From the tactical strategy perspective, from the system perspective, and from the service delivery perspective, we have made improvements in all these levels. To lower our customers' entry level to pursue wealth management products and cooperate with our partners to innovate new products, such as the fixed products, and provide accompanying service and investment and educational services to our clients.
The international leading partners in the international community have always learned from these perfect perspectives, to always put our customer in the center, and to transform, to make income from consulting services and providing suggestions to our clients. So this is what we have been improving in terms of our capability. In terms of our brand meeting in July about wealth management business, we have announced the big news of making 90% discount of our subscription fee. This includes all fees for all channels, for all product types. But for this time, we have made a thorough fee reduction, and why are we making such kind of selection? Because we have always adhered to our principle of taking customer as the center to create value for our customer.
It is our core and sincere starting point to create value for our clients, to let our clients make good investments from the products on our shelves. When the interest rate in the market is challenging, when the external market is challenging, we decide to make such a prudent decision, even though it would have influenced our intermediary income. It's a multiple-choice question. It is based on what we have select as our philosophy. Of course, we have made such decision based on careful consideration because we can take the negative impact brought by it. Of course, we have seen the income from clients holding fund management products has account for a higher proportion in terms of our total.
And that's why we see, we think that the discount we made in the transaction fee to sustain, because we have been transforming from the traffic-driven operational model to a size-driven, a scale-driven operation model. We aim to be an expert, to provide accompanying service to our clients, so that they can make us more focused on customer strategy and some other strategies that allow us to provide long accompanying service to our clients. We wish that we can provide customers with more lower fee, with more diversified product selection, and more accompanying service to our clients. We believe that it is one direction from us to transform into an investment consultant. In terms of accompanying service, in terms of the sales of products, these aspects are all what we need to focus on in the next phase of our transformation in the wealth management business. Next question, please.
Next question is from Mr. Wang Xin from Point72.
Dear senior management, thank you for giving me this opportunity. I'm Wang Xin from Point72. I have a question about the NIM. We see in the second quarter, the decrease of NIM has narrowed. I would like to know, what measures have you taken to stabilize the NIM, and what is your outlook of the next half of the NIM trend?
The question will be taken by Mr. Peng.
So this question is basically often asked by our analysts. My answer is that, continuous pressure will be seen in the NIM trend. So as you mentioned, that even though our quarter-on-quarter decrease has narrowed, but generally, we see a decrease in NIM.
For the quarter-on-quarter decrease, there is two basis points compared with the first quarter, with the four basis points of the last year. The year-on-year decrease of 23 basis points is still a great pressure for us, but we think that the result is very hard to achieve. The core is that we think it's lying on the asset liability portfolio management. We have seen some results of our hard work, and the factors are basically the following aspects. The first one is about repricing, including LPR cut, about the existing residential mortgage lowering. These repricing influence continue to release its negative impact. The second is about supply-demand relationship change. For instance, the competition for high-quality projects, for residential mortgage loan. These have all lead to the repricing decrease, and these have bring us some pressure in terms of the downward trend.
This is also reflected in our liability side. Even though influenced by the self-disciplinary mechanism, but we still see the deposit cost continue to be rigid because of the market competition, the fierce market competition. The second is about the supply side and demand side change relationship. The third part is about loan. Credit card loan, residential mortgage loans proportion has decreased in the total retail loan, which has driven to the lower asset yield, and also in the deposit sides. The lower proportion of demand deposit has also lead to higher liability cost. Basically, these three factors will continue to exist. You must be concerned about the trend in the future. For quarter- on- quarter, a decrease, it will narrow, and the slowing pace will be more moderate.
So compared with last year, it is also a phenomenon what we can see. For quarter on quarter decrease, it has been narrowed. It is also a fact. Compared with the 24, 27 basis points and the 23, 23 basis points, year on quarter- on- quarter. For the third and the fourth quarter, the trend will still go on. As this year, I've also made my point clear with several communications with analysts. The pressure will continue, but the pressure will be released to some extent. We believe that if the external environment will not experience a lot of changes, under such backdrop, we believe that the NIM for the next year will stabilize. So I would like to introduce my three points of view. First is that China's economic growth momentum will be positive.
The supply and demand relationship will also sustain, so that the trend, the momentum, will be positive compared to this year. The second is that the regulator have been paying special attention to the NIM of the banking industry, and we can see the industry average level of the NIM has been around 1.5%. From the liability side and from the asset side, we will see more policies coming out to support such kind of situation. And through both sides of supporting policies, from the liability side and from the asset side, this will make the commercial banks NIM more stable. And the third, I think, is from our proactive measures taken by CMB. It is the time to fiercely test about a bank's asset and liability management capability, how to stabilize their relationship, their structure.
It is an ongoing effort for CMB, and it is what we will continue to do to strive effort, to focus on additional areas, for instance, the repricing of our liability... and we will pay special attention to the management of our structure. Well, sometimes we believe that how to manage the structure will influence even more on the NIM, regarding deposit cost is even a very important influencing factor. For the quarter on quarter decline of the NIM, it was seven basis points. It's a very obvious decline. It is because of our demand deposit NIM decreased by five basis points. And compared with the proportion of the demand deposits, we believe that the whole process of the liability management rely more on the structure to attract, to acquire high-quality deposits as a grasping instrument.
For us to evaluate our internal performance, we will pay more focus on the settlement-related deposit, low-cost deposits, payroll, and the deposit arising from the growth of our customer base. We believe this is our core competitiveness. And for loan structure, from asset structure, these are also very important perspective, how to better allocate our structure, how to make good investment of our interbank assets, build assets. And we continue to increase the proportion of retail assets in the total assets. These are all the aspects I would like to express. So based on our current management model, we will keep focusing on repricing, we will focus on the structural construction. And all in all, I believe that in the following trend, we will maintain our performance that is better than the market and outperform our peers.
I would like to make one additional point about the trend of NIM. So for China Merchants Bank, our NIM was 2% according to our latest report, and the average level of the industry was 1.54%. This is still a leading position in the market. For our next step, we will guarantee the CMB's NIM to outperform our peers. Our NIM will be marginally enhanced and will be drifting towards a good positive and continue to stabilize. And at the same time, CMB will continue to lead the market in terms of the NIM. That is our basic judgment. Thank you. Next question, please.
The next question is from China Securities, Mr. Ma Kunpeng.
Dear senior management, thank you for the question. I have a question about international development.
We see many Chinese companies going global, and there are many retail clients are seeking global allocation of assets. In your annual and interim report, you have spent some contents introducing the cross-border finance business. We know that China Merchants Bank have a lot of quality clients in domestic market. You have also developed overseas branches and subsidiaries. I would like to know about serving the Chinese companies going global. You might have to face challenges from the Chinese banks and also foreign banks. How do you continue to maintain our professionalism and competitiveness? What is your core competitive edges? And what kind of business will serve as a key product that you can use to serve your clients? I would like to learn from both the corporate and retail client side. Thank you.
I will take this question. Thank you.
International development, this is what CMB have been focusing on, and this is also one of our core strategy. Since our inception, we have attached great importance to the international business, and through years of development, we have explored and established our own featured advantages. We have established overseas networks to better serve Chinese companies going global. In New York, Sydney, Singapore, Luxembourg, London, we have established branches. We have also preparing for a new Dubai branch to better serve Chinese companies going to Middle East. In Hong Kong, we have CMB Wing Lung Bank and CMB International. We have consolidate our advantages, and also we have established a subsidiary in Luxembourg called CMB Europe. In terms of this network, in terms of our branches and subsidiaries establishment, we have already construct our global presence.
The second aspect is that we strive to construct the cross-border finance product metrics. The PBOC has granted us with an offshore banking license that we can provide services to companies registered in the overseas market. And our cross-border settlement business, our overseas syndicated loan, our trade finance business, these are all what we can deliver to our clients. And for the third aspect, and the overseas foreign banks, we have established good relationships. They have established a large network across the globe. They have strong capabilities in providing professional services, and they have developed very strong risk and compliance culture.
As we cooperate with these banks and provide cooperative services to our clients, we believe that these banks can offer us help in terms of our risk understanding and to dissolve some local risk arising from local operation. And of course, CMB has already established a very comprehensive product system, that is, account system. For instance, the OSA account. The overseas registered companies can open OSA account with CMB, and for companies registered in a free trade zone, and for the overseas enterprises, we can provide OSA, NRA, FT, and EF accounts services to them, and we can also leveraging on our overseas branches to provide local account services to them. And for these years, we strive to provide these kind of services, comprehensive services, to our clients.
Cross-border M&A, financing, and et cetera, these are all products and business that are undergoing fast development. For retail business, international development, international wealth management business has actively cooperate with our license we have and the key areas that we focus. In Hong Kong and in Singapore, we aim to focus on these two areas to develop wealth management and private banking business. And in Hong Kong, we have obtained three licenses that can provide the retail banking service to clients, and to provide better coverage of Hong Kong resident and residents from the domestic market that is traveling or studying in the Hong Kong market. In Singapore, we continue to build up the capability of private banking service through our Singapore branch, and to help Chinese citizens going to Singapore, the residents in Singapore, to purchase real estates and et cetera.
CMB's international business, foreign exchange business, and overseas business, we wish that the proportion of this business will continue to grow. We have been learning from the Japanese banking industry, that in the past years, they continued to press on development of international business to offset the negative influence brought by the market, the business in its domestic market. So basically, the international business development, to some extent, could bring us some new growth engine of our whole development.
Thank you, Mr. President Wang. We'll have the next question.
Thank you for giving me this opportunity. My question is about the asset quality in terms of retail banking. And we are seeing deterioration of retail asset quality among the industry, so would the management share your view on... with us? That's, what is your view on the outlook of retail asset quality, and especially for your retail loan, what will be the major points for loan growth in retail?
Ms. Wang Ying will answer this question.
I think two parts. The first one, in for our own calculation, we have a separate calculation of risk quality for retail loan, which doesn't include our credit card. In terms of retail loan, we have quite a growth. It's grown in by RMB 117 billion for retail loans, and also the higher proportion of market share. But I think that there are more pressure on asset quality. That is why you are seeing increasing in terms of special mention loan ratio and overdue loan ratio. But definitely, our level is ahead of our peers. Our NPA, NPL ratio and our special mention loan ratio and overdue loan ratio have all increased a little bit compared to the beginning of the year.
And according to our own forecast, in the second half, looking ahead for quite a while, we're still facing pressure in terms of deterioration in terms of asset quality, retail loan asset quality. We are expecting that as overdue loan and special mention loan ratio might continue to increase, but I think we will continue to optimize our risk structure and using the quantitative measure, and also we are re-emphasizing the disposal and different measures to do risk management in retail banking. And second, we will continue to focus on quality customer, quality regions, and quality products. And also, we'll use more fintech technologies and to increase the application of data, use data to, so as to maintain a sound asset quality. And just as Mr.
Zhong said that we, our risk appetite is quite prudent, so we have a sound customer base, and we have quite a rational retail loan product. I think it's very proper. We have totally RMB 2.5 trillion retail loan, 80% are collateralized, and over 80% are collateralized. For mortgage loan, the ones that is in first and second tier cities accounted for 87%. For newly dispersed loans this year, for the loans in first and second tier cities accounted for around 90%. And for the LTV is around 33%, is only a little bit, is 0.15 percentage point compared to the beginning of the year. So it's a rational retail loan structure.
We think that even though our NPL or special mention loan ratio or overdue loan ratio might continue to increase in the second half, but it's still under control. This is for retail loan, and next is about credit card. For credit card business, I think it's a high level of risk. Our business strategy is stable and with a low volatility. We cope with the external pressure and to maintain a stable business. NPL ratio is 1.78%, and it's quite stable quarter on quarter basis. Around NPL formation is around RMB 20 billion, a little bit down compared to the last year. As Ms. Zhong says, for credit cards, special mention loan and also overdue loan ratio for credit card has increased compared to the beginning of the year and also compared to the first quarter.
This is mainly because we see weak recovery in the economy, and people's capability to repay is deteriorating. Secondly, we strengthen our management, risk management, and also risk classification for the business. That is why you are seeing more SML and also for overdue loan. So I think by the end of this year, the NPL ratio and also NPL amount will be quite the same as last year, and we think the NPL formation will be a little bit higher than last year. And NPL ratio formation ratio will be lower than that of last year.
I think looking ahead, I, I think that for retail loan, for secondary mortgage will be one of the major points that we would like to lay more emphasis on, and micro loan and also consumption loan will also be a main focus. For credit card loan, I think we'll play more emphasis on installment payment products, like the auto installment. In conclusion, for asset quality, for retail, no matter for retail loan or for credit card loan, totaling around RMB 3.5 trillion, I think I will. A very brief summary. I think in terms of risk, we will face more challenge and pressure, and we will not lose our guard on that, and we'll be very prudent to tackle with external environment.
Secondly, because just now I share with you that we have a sound customer base and also structure, that is why I think that the risk, asset quality will be under control. And thirdly, for newly increased loans in these areas will be moderate growth in this area, and also we are very prudent in this area. Overall speaking, I think the overall asset quality will be sound. Well, I still remember in the past times when Mr. Ma Weihua was the President of the bank, he said that to be faster, better, there will be faster, you will be better.
So as Wang Liang said, in terms of risk management for retail loans, when we cannot decide where the risk condition will go, we can only decide is how we do our capability is the only thing that we can decide by ourselves, so which means that we'll be fast, move faster in terms of risk management to have a better asset quality.
Next is from CLSA, Miss Shen Hu.
Thank you very much for giving me this opportunity. My question is for retail loan. As you just now, we are seeing that we have increasing risk, and whether you are sufficiently provided for, what is your expectation for credit costs and also coverage ratio?
The first question will be answered by Miss Wang Ying.
We have a sound risk classification, and we have sufficient provision. The second question will be answered by Mr. Zhong.
As for provision for credit cost and also for coverage for the whole bank. I think in terms of provision, we have been very prudent. We are classifying the asset in a very strict manner. This is the principle that we always stick to, and this is also what we will do in the future. By the end of the first half, Mr. Wang has already given you a very detailed presentation. We still continue to have quite a high coverage ratio, around 434%. We also have a coverage loan ratio of 4.08%, which is much higher than the industry average, and credit cost is 0.77%.
It's a little bit, it's a little bit higher than the year of last year. Compared to the same period of last year, it's a little bit down by 0.1 percentage point, so we continue to have a reasonable credit cost. Looking ahead, I think that I would like to explain the logic behind that. For provision, it still is dependent on the real condition of our asset quality, namely, how we expect the expected loss will go ahead. In the first half, there are some factors affecting these provisions. The first one is loan continue to grow in a stable manner. This is one factor behind the provision. Secondly is the structure of the loan, structural changes.
Just now, as I said, in terms of corporate and retail, we are have our strategic focus, and at the same time, we are dynamically optimizing our our loan structure. And thirdly, it's highly relevant to asset quality. In terms of asset quality, NPL ratio 0.94%, so down by 0.01 percentage point. And NPL formation is also coming down, so this is also one reason behind the credit cost. If we look ahead, if we continue to have loan growth in a stable manner, but since some industries, like property sector, are seeing increasing or risk or evolving risk, and also spreading, it may spreading to upstream and downstream industries. And at the same time, just as Miss Wang Ying said, in terms of retail assets, there are some potential risk pressure.
One thing I would like to supplement is that our retail loan, in terms of when we are looking at the total asset book, I think retail loan still is still a very good product when we look at both the profitability, risk, and also the asset size. And if you look at the historical loss given default, and it's highly diversified, it's highly collateralized, and the customer quality is sound, the loss was actually very small for retail loans. That is why I think in terms of provision, when we look ahead, we think that is the... Our, my forecast will be quite the same as the asset quality, and then for the whole year, the coverage ratio and also coverage to loan ratio will be stable and might slightly decline. So this is my judgment under the current condition. Thank you.
Next question from Guosheng Securities, Mis s Ma Tingting.
Thank you for giving me this opportunity. I have two small questions. From a whole year's perspective, what will be the driving force for fee-based income for your non-interest income? And if we look at the whole debt market, especially for the other non-interest income, what will be the contribution from that part?
Yeah, Mr. Peng Jiawen will answer this question.
Thank you for this question. As for non-interest income, I think we are still facing pressure. In the first half, for non-interest income growth has declined by 1.43%. But this negative growth, compared to the first quarter, is also the level of decline has also narrowed down. Some changes have happened. When we look at the holistic composition, the first one comes to fee and commission income, the second one comes to other non-interest income.
When we look at the fee and commission income, it's declined by around 18%. This is a quite high level of decline, but it's also narrowing down quarter on quarter basis, and the main reason behind that is from the negative impact coming from insurance and also the mutual fund agency sales. Especially for insurance, we have seen decline by over 50%, and for agency sales of mutual fund is over 20%. I think. Yeah, the impact from last year was quite big because of the fee rate cut, and in terms of structure and also in terms of business volume, we are continue to doing more effort on that, and for insurance, we will have more sales volume year-on-year basis. And for agency sales, we are also moving towards more. We have more sales on the funds which have a higher rate.
But this cannot fully offset the negative impact coming from fee rate cut. In terms of the other new driving points is for the growth rate for agency sales of WMPs, is up by 40%. This is mainly because our AUM and also customer group is growing, as Ms. Wang Ying and Mr. Wang Liang has just shared with you. WMPs volume, sales volume has grown quite good, together with fee income. And at the same time, some of the profits are coming from the asset allocation for our customers. Currently, we still are seeing very low risk appetite from customer. So to have more WMPs for customer is also in line with customer's risk appetite trend.
Even though we are seeing decline in our fee coming from insurance and also mutual fund, but we are seeing still growth in terms of our W-WMPs. Secondly, for other non-interest income, including bond trading and also for bill discounting trading, and also for some equity investment, this accounted for around 40% of our fee-based of our non-interest income, is quite at a stable level. Just now, you mentioned how much is coming from the bond trading. I think overall speaking, bond trading is still we are targeting at the duration management. Why I say duration management is from an interest management perspective to sell some of the long duration bond.
I think it's a good time point for that, but this proportion is a small amount. It's mainly coming from profit, mainly from mark-to-market fair value of the holding of the bonds. And looking ahead, I think that actually this part has grown very fast in the first half, namely 34%, and has contributed quite good to the total income. But we think that in the second half, the market will be more volatile. And actually in the first half there will be a one-way bull market for the bonds, but in the second half I think it will be more volatile, no matter it's from the investors' mood or it has become more rational.
Interest rate market rate is quite stable, so this contribution from this part will be smaller than that of the first half, so the growth rate will also be slower than the first half. This is my judgment for that. This is for other non-net interest income, but definitely for the total growth of our non-interest income, we'll continue to focus on fee and commission income. We'll continue to focus on AUM and customer group, by this solid foundation that will drive the future fee and commission-based income, of course, but we also have other driving points, like the investment banking, settlement clearing, risk management, transaction, and also trade finance. These are all the areas that we'll emphasize on to be the driving points for fee-based income.
Next question, please.
Next question is from Guotai Junan Asset Management, Zhu Chenxi. Can you hear me?
Yes. Thank you, senior management, for this opportunity. My question is about the corporate finance business. As we can see that, Mr. Zhu has assumed his position to be in charge of the wholesale finance. And we can also see that, Mr. Zhu himself has assumed position in the branch, so he has the front line, business and also have experience in risk management. Generally, investors tend to have more positive and confidence in his new business in charge. So I would like to understand that, what do you think about the good and things that you need to improve in terms of the corporate finance business, and what is your next step?
Unfortunately, thank you for your question. Mr.
Zhu was on a business trip, and he's not able to take the question himself. I believe that if he were here, he would have a lot of information to exchange with you. I believe that for the information sharing, I think me myself could take some of your questions for China Merchants Bank. 20 years ago, we have conduct our second transformation into taking retail finance as our major position. This has formed our featured advantages and what people boast ourselves as king of retail. We have nurture, cultivate, and improve our corporate finance business and our capability in the market. For the Chinese market, it is a large landscape. Retail finance has very strong potential. That is why we need to cultivate retail finance business.
But for corporate finance, China is the second-largest economy in the world. To provide good services to corporate clients is also very important to us. That is why we improve our internal capability. However, in the past, due to our limited resources, we prioritized to develop retail finance business. We have put more human resources and other resources to retail finance business, and for corporate finance, the resources might be quite limited. But due to our limited input, that has forced us to build a corporate finance with selected focus to cultivate our distinctive features in our corporate finance business. So I think we have advantages in corporate finance in the following aspects, which is also a good opportunity to show to the market that you might have not developed enough understanding.
The first one is that we have developed segmented and classified management of our customers. For corporate customers, we have divided it into strategic at the head office level, to the branch level, to basic customers, and to micro and finance, small-sized customers, level. And we have according to different industries and according to different scales, to categorize our corporate clients, to provide targeted and customized service to them, and provide a professional and systematic solutions to different kind of customers according to our segmented and classified management model. And secondly, our product metrics offering to the corporate clients, not just deposit product, loan product, settlement products, but also. As we have other limited resources back in the old days, we have to leverage on online banking to provide services to our corporate clients.
We strive to build our cash management that is cross-bank solution to our clients, and now it has evolved into the cash management cloud, the treasury cloud, the wealth management, management and financing management, and to strive to formulate a whole all-in-one platform, a treasury management service to our clients. These offerings, these products, has evolved based on technological revolution and based on clients' needs. It continued to iterate, it continued to be our advantages offerings to our clients, and right now, we have around three million corporate clients. It's also quite a leading position in the domestic... among our domestic peers. By offering these products to our clients, we have accumulate rich experience.
60% of our corporate clients are contributing to our demand and settlement type of deposits, and while providing good services to these clients, we can acquire more and more low cost of liabilities from these type of deposits. And for the next point I want to mention, is that we strive to build a special mechanism that is one entire bank for one customer. When customers are going global, these type of clients would require services across the bank. They would require comprehensive and all-round services from our clients. So that's why, regardless of branches in domestic or in the global market, CMB need to provide comprehensive services to these clients. Wherever our clients are, they can enjoy a unified and standard level of service from CMB.
Since the working conference held by the central government last year, according to the new external situation and environment, how do we respond better to the requirement? How do we developed better in terms of the party finance business of the five priorities? For instance, we have established a special kind of sub-branch called the SciTech branch, to provide better services to SciTech enterprises. For instance, for retirement finance, we can provide better services to our clients. In terms of loans and bonds investment, and for other perspective, we need to put more focus on developing the green finance. We have especially established a digital office for developing digital finance, and these will all be our focus and emphasis laying on developing the business in the five priorities to follow the policies released by the central government.
And, for this perspective, these efforts are all we have been made in terms of developing our corporate finance business. So, this is, from my perspective, what we have been done in the corporate finance sector. While in the previous, communication, I think that corporate finance, this topic, is rarely mentioned. I think it's a good question coming from you, and I will pass your question to Mr. Zhu himself. What achievement we have made, what shortages that we have been making up, and, what future plans do we have? I will pass them to Mr. Zhu, and thank you. I will have the next question.
The next question is from Judy Zhang from Citi.
Thank you for giving me this opportunity. I am Judy from Citi. I have a question regarding the profitability growth.
For the past, CMB has rather strong valuation premium compared with the state-owned banks. And, basically, we see the profit growth for CMB comparatively the same level as the state-owned, such as ABC. We have quite a high level of the allowance coverage ratio. Is it possible that we can release some allowance to bring the profit back to positive growth?
As we have quite strong valuation compared with the state-owned banks. Last week, we see the interim reports released by our peers, and I have took a closer look at those interim reports. The revenue and profit growth have both shown negative growth. It is a fundamental, but for some banks, we see a positive growth in the revenue and in the profit. And for some bank, the revenue record positive, while the profit recorded negative growth.
For the mainstream banks, CMB is just like them, both record decrease. Well, but for us, for the second quarter, compared with the first quarter, the magnitude have been narrowed in terms of our decrease, in terms of the profit, and it's showing a quite positive trend. How to better sustain the condition and to narrow the decrease in terms of the revenue and in terms of the profit, it remain to be our question, and it remain to be problems that we need to tackle. But we will not attach too much importance to the result of the financial indicators. We need to attach importance in the process of operation for China Merchants Bank.
In the external environment, we see lower market interest rates to provide a better environment for the real economy. We believe that for China Merchants Bank, we need to do the right thing to stabilize our three fundamentals: to strengthen, enlarge, and optimize our customer base. The second is to guarantee our asset quality, to maintain it to be stable, so that we are able to achieve the growth of our profit. The third is to improve our market share, our wallet share in the market, in different regions and in different business areas. By increasing our wallet share in the market, we can see progress when the market environment changes, when the market environment reverses, so that we can see silver lining in terms of our profitability and the operating income.
These serve to be our three fundamentals that we will continue to improve, and at the same time, in order to guarantee our growth and profit, we will continue to increase our management efficiency and reduce cost. We have continued to improve our cost and to control our administration expenses down by 0.05% year- on- year, so that to better guarantee the growth in our profit. And at the same time, we will better manage our funding cost and a lower yield to guarantee the growth in the profit. More importantly is that we need to control the risk cost. It is also in a decreasing trend. By increasing our asset quality, I believe that the risk cost could also decline accordingly, so to guarantee the increase in our profit.
So by doing decreasing the allowance to release more allowance to the profit level, I believe it is not our approach to realize the growth in our profit. I believe it is what we focus on to increase our operation efficiency, to improve our business, to strive to build our operation and management capability, to make more contribution to the profit growth. We have the confidence to make further progress, and at the same time, we will control risk costs to lower the allowance. And finally, we achieve a good growth in the profit, so to deliver better results to our shareholders. Thank you.
Thank you, President Wang. Due to time limit, we will have the last question. To guarantee the right of individual investors, we have collected questions from them via email.
As most of them overlap with the questions that we have just discussed, we will choose one representative questions to answer. Please have the staff read the questions we have collected beforehand. Thank you. My question is, many of the listed banks have extended interim dividend payout. Why did not CMB extend such kind of arrangement? Do you have any, dividend payout plan for the interim period in the future?
Thank you for your question. As the interim result, released, many banks have arranged the interim dividend payout. We have attached great importance to them. CMB has focused on creating value for investors to deliver better returns to our shareholders. The interim dividend plan, we will act according to our CAR and the business development requirement, and to collect more advice and suggestions from our investors to make thorough discussions and decision-making.
For CMB, the process, the cost, is also within our consideration, and we will take it seriously and attach great importance to such arrangement, and learn more from our peers, so that we will make our plans accordingly. Thank you.
Due to time limit, CMB 2022 interim results presentation will now conclude. For further details, please refer to our results announcement released on the website. For more questions, please feel free to contact our IR team. Thank you for joining us today. Thank you. Goodbye.