Investors, analysts, good morning. CMB 2024 Q3 Results Conference will now begin. I'm Xiao Yuanfang, General Manager of the Office of the Board of Directors. CMB has announced its 2024 Q3 results on October 29. Today's event is being conducted via a live audio webcast. I would now like to introduce the participants of today's conference.
They are Mr. Peng Jiawen, Executive Vice President, CFO, and Secretary of the Board of Directors, and the General Managers of Asset and Liability Management Department, Finance and Accounting Department, Risk Management Department, and other relevant departments.
We also have invited independent Non-Executive Directors, Mr. Wang Shixiong, Mr. Li Menggang, Mr. Liu Qiao, Mr. Tian Hongqi, Mr. Li Chaoxian, and Mr. Shi Yongdong, to participate in the event online o n behalf of China Merchants Bank, I would like to welcome you all to the conference and thank you for your interest in support of and investm ent in Chin a Merchants Bank.
Today's meeting includes two sessions. In the first session, Mr. Peng will review our financial highlights and the operational performance for the Q3 of 2024 i t takes around 15 minutes. We'll then move on to a Q&A session, which will last around 75 minutes. Simultaneous interpretation in English will be provided for both the sessions. Now, I will give the floor to Mr. Peng on the introduction of the Q3 performance.
Dear investors, analysts, good morning. This Tuesday, we released the 2024 Q3 report, and I'm happy that I can have the opportunity to communicate with all of you together with the department heads from several departments of CMB head office i would like to take this opportunity to thank you for your long-term attention and support.
Now, I would like to briefly introduce our performance for the first three quarters. According to our traditional practice, we are reporting the financial statistical calibration under the IFRS standard. Since this year, as we are faced by the complicated environment, we stick to our Value Creation Bank strategy and stick to our dynamically balanced development, featuring quality, profitability, and scale, pursue progress amid stability. Our first three quarters are presented with the following five features.
First, our decrease in the net operating income and net profit both narrowed. Our ROAA and ROAE remained at a high level. The group's net operating income, CNY 252.6 billion, yielded a decrease of 2.93%. Net profit attributable to the bank's shareholder, CNY 113.18 billion, yielded a decrease of 0.62%, down by 0.18 and 0.71 percentage points compared with the end of the first half. ROAA and ROAE, 1.33% and 15.38%, respectively.
We continue to maintain sufficient and high capital level. All tiers of CAR increased compared with that of the end of last year u nder the advanced measurement approach, our core CET1 CAR was 14.73%, Tier 1 CAR 16.99%, CAR 18.67%, up by 1 percentage point, 0.98 and 0.79 percentage points, respectively.
We enhanced our refined management over cost and showed initial results in fee reduction. Our operating expense was CNY 82.17 billion. Our cost-to-income ratio, 29.59%, yielded a decrease of 0.5 percentage points s econdly, we enhanced asset liability management and achieved stable growth in both loan and deposit.
We strive to overcome different challenges and take multiple measures to improve the growth of our low-cost core deposits. We strengthened high-quality liability development a s of the end of September, our total asset was CNY 11.65 trillion, up by 5.68%. Total loans and advances, CNY 6.76 trillion, up by 3.84% compared with the end of last year, among which retail loan was CNY 3.57 trillion and accounting for 52.88% of the total.
Corporate loan, CNY 2.77 trillion, up by 6.7% compared with the end of last year t otal liability, CNY 10.5 trillion, up by 5.56% compared with the end of last year. Total customer deposit, CNY 8.73 trillion, up by 7.08% compared with the end of last year a s we see deposit trending towards time deposit, our demand deposits' proportion over the total was 50.6%, still at a high level.
Thirdly, the decline in our NII and NIM both decreased. We continue to be influenced by the LPR cut, existing mortgage rate reduction, and insufficient effective credit demand, and the loan yield decrease for the newly granted loan o ur total asset yield was put under pressure. For that, we continue to drive the decline of our cost of the liability and, to some extent, offset such influence of the narrower spread.
For the first three quarters, our interest-bearing liability cost ratio was 1.69%, and our customer deposit ratio was 1.58%. Our NII was CNY 157.3 billion, whose decline was narrowed by 1.1 percentage points. Our NIM's yield decrease and "decrease" both narrowed, remaining at a high level among the industry. Our NIM for the first three quarters was 1.99%. Yield decreased of 20 basis points. And fourthly, we continue to have an even more solid foundation for wealth management business.
Since this year, although we're faced by a series of challenges, such as the continuous impact of fee reduction, fluctuated capital market, and etc., we still maintain a good growth in terms of our customer base and AUM. As of the end of September, the number of retail customers was 206 million.
Golden Sunflower and above customers, 5.06 million, up by 9.16%. Retail AUM, CNY 14.34 trillion, an increment of CNY 1.02 trillion compared with the end of last year. The AUM from Golden Sunflower and above customers, CNY 11.7 trillion, up by 8.15% compared with the end of last year, both contributing to laying a solid foundation for our healthy net non-interest growth.
Our fee and commission income was CNY 55.7 billion, down by 16.9%, among which wealth management fee and commission income was CNY 17.4 billion, a yield decrease of 27%, whose decline was narrowed by 4.88 percentage points. Key items such as agency distribution income from wealth management products, insurance policies, both narrowed in terms of its decline. We seized opportunities in the bond market. Non-interest net income was CNY 39.6 billion.
So for the first three quarters, our net income from non-interest was CNY 95.3 billion and remained at a high level. Fifthly, our asset quality remained stable and having a healthy and robust risk absorption capability a s of the end of September, our NPL was CNY 63.5 billion. Our NPL ratio was 0.94%. Special mention loan ratio was 1.3%, up by 0.2 percentage points. Overdue loan ratio, 1.36%. The company's new formation of NPL was CNY 48.2 billion, yield increase of CNY 2.71 billion. The NPL formation ratio was 1.02%.
The company closely followed external changes and continued to prevent and mitigate risks in key areas. Real estate and manufacturing loan NPL were 4.8% and 0.46 percentage points. Influenced by the external environment, retail NPL ratio was 0.94%, and retail overdue loan ratio and special mention loan ratio both increased, but the risks are controllable. We continue to follow risk and prudent strategy to make allocation.
Our allowance coverage ratio was 432.15%. Loan provision ratio, 4.06%. For the first three quarters, the company's credit cost was 0.71%. This is our financial performances for the first three quarters and also our operational characteristics. Since this year, we see a lot of uncertainties in the external environment. The economics are generally stable, but we are still faced with challenges such as insufficient effective credit demand and weak social expectations. Since the end of September, we see a package of policies intensively introduced.
And looking into the full year, we will continue to focus on our strategic target and stick to our operation philosophy to put priority in quality and efficiency, take active action, and provide better value for our customers, employees, shareholders, partners, and society. Thank you. Thank you for the introduction,
Mr. Peng. Now, we will enter into the Q&A session. Please follow the instruction given by the operator to raise questions. Please state your name and the agency you represent before you raise the question. Now, we will enter into the Q&A session. For mobile users, please press the More button in the interface. For computer users, please press the Participant button to raise hands. Hence, as there are many people wishing to ask questions today, please limit your question to one only. Now, we will have the first question.
The first question coming from May Yan from UBS.
Thank you, management. My question is for Mr. Peng. We are very happy to see that the Q3 profit has seen positive growth for around 0.8%. Is it a sustainable trend? And all the banks have released their Q3 results e have seen that state-owned banks, they have seen positive net profit growth. And for Q3, even over 3%. So I know CMB is a bank with very good fundamentals. And is it possible? for the Q4 for CMB to see higher net profit growth rather than only below 1%? Is it possible?
And just now, Mr. Peng said that since 24 September, there are a series of policies that have been launched. From that point of time, does CMB have seen any recovery in terms of loan growth and also agency sales of wealth management-related products? What would be the impact on the Q4's performance and the next year's performance of CMB? Thank you.
Thank you. I think your question can be concluded in two aspects. One is our forward-looking or for the trend of our profit and operating income growth. Second question is for since 24 September, a series of policies have launched w hat will be the impact on CMB? And I think it's most concerned questions by many investors, and I would like to give you a briefing on that.
So firstly, is the impact from the policies on CMB, and what will be our considerations for the next step? And secondly, I will share with you my views on the forward-looking trend. Since the end of September, I think a lot of changes have taken place from the policy side i t has posed a big impact on the capital market, definitely also on the banking's operating environment. I think the impact can be concluded as follows. First one, the policies are trying to expand the domestic demand.
Like to emphasize on investment into strategic and important areas and also into important regions. Secondly, it has injected vitality into the capital market to revitalize the capital market and to stabilize the property and also the stock market. Thirdly, is to mitigate risk. A serious policy has been taken to mitigate risk in property areas and also in local government financing vehicles. We think that the signals sent out by the policies are very strong. The attitude from the government is very direct.
Actually, I think everyone can feel the changes from the direction of the policies. I think very importantly, it's a coordinated policies. Thirdly, it's very targeted at the weak points and difficulties in the society trying to solve the problem. That is why I think the impact will be big. As for CMB, we have done some analysis.
The impact will be as follows, including challenges and also opportunities m ore is more positive. Overall speaking, it's more positive for CMB. Firstly, CMB, one of the backbones of CMB is extensive wealth management business.
Now we have seen recovery in the capital market. Our extensive wealth management business is highly related to capital market performance, including our fee-based income, including our business like wealth management, asset management as long as we think that the trend in the capital market will be good, then that will be beneficial to our wealth management business, like the newly launched fund, A500.
And our sales volume is around CNY 20 billion. So we have a large market share t hat is why, from this point of view, I think we can benefit from that. And secondly, in terms of consumption, now the policies are trying to stabilize the market confidence.
This definitely will help to recover some of the consumption confidence. So that will be beneficial to CMB's business, like credit card, like consumption loan, as long as the consumption recovers and warms up again. And I think definitely will be positive for our retail loan business. And thirdly, I think when the capital market turns better, it means that people's risk appetite will also see some changes.
That is, we can see some changes in the trend for term deposit, especially when we are seeing the demand deposit w e have seen some big changes. We don't know whether it's a very certain trend. It's quite difficult to say that currently. But I think that once the capital market turns better, then we will definitely have a higher advantage in terms of the demand deposit ratio.
And fourthly, I think we can benefit from the risk mitigation policies. There are a lot of policies targeting the property market, like the local government debt areas. I think all the banks can benefit from that to mitigate the potential risk. So these are the four areas I think will be more beneficial for CMB. But definitely, there will be pressures and challenges in the following three aspects.
Firstly, even though I think there will be better demand deposit ratios, the volatilities will also be big. And we have seen the first day after the national holiday, there is a big outflow from the demand deposit. And at the same time, we are seeing higher demand deposit, but it's more volatile. If the capital market turns better, I think we will face more volatility in the deposit side and even have some challenges on the deposit growth. And secondly, is for NIM.
This time, we are seeing adjustments on the backbook of the mortgage loans and also the adjustment of LPR. Definitely, you have seen PBOC have downward adjusted the deposit rate as well. And overall speaking, we don't know whether there will be a continuous adjustment of the rate. So that will be quite a challenge for the bank.
I think later on, there will be more specific questions on NIM w e can share with that. Definitely, NIM is a pressure. Thirdly, is for our investment book. Namely, there are more volatility in the debt market. So I think next year will be more volatile for the debt market. So that will definitely affect our income from the investment book. So this year, we have seen a growth rate of 28%, but that will be quite uncertain next year.
That is also a risk. And definitely, we have done forward-looking analysis a nd I think we will take the following steps. Firstly, to embrace the new changes from the market and to proceed with our extensive wealth management business. This has been the advantage of CMB, and I think it will continue to be so in the future. So in terms of the product side, we're preparing products and also to prepare our capability to service customers.
And especially in terms of asset allocation, we're doing more preparation on that. And also not only the wealth management, but also investment banking, asset management, and also wealth management we are all doing preparations.
And secondly, for our investment book, as for the volatility in the debt market, we need to seize opportunities. And we think next year, even though there are volatilities in the market, I think there will still be opportunities for us to seize the periodic opportunities and structural opportunities. Hopefully, that we can achieve good results. And thirdly, I think we need to do better in terms of asset management, and especially for NIM management. And most importantly, is for structure of the asset and liability.
I think in terms of NIM, we will see challenges on the NIM side, but I think structure is an even more important factor compared to pricing, including structure of our asset book, structure of our loan book, and how we can allocate resources to corporate and retail, and how we can allocate resources to credit card, mortgage, and also other retail loans.
In terms of liabilities, to make sure that we maintain a high ratio of core deposit and also to increase the demand deposit ratio so as to lower down the cost, funding cost. Fourthly, in terms of risk management, we will follow the policies to mitigate risk in major areas like property, like LGFV, and also retail risk. I think later on, there will be also questions touching around these retail risks. We have seen some rising in risk in the retail side. Definitely, we are following this very closely, and fifthly, I think that we will strictly manage and to be better in terms of innovation and to consolidate our business foundation.
These are some considerations when we are facing the new opportunity, and secondly, I would like to share with you how I see the trend. Definitely, I cannot share with the specific data, but overall speaking, I think our operation will be stable? and it will be moving towards a better condition. And in the Q3, it's a feature of most of the banks.
I think to be positive or negative profit growth. I think you do not need to lay too much emphasis on the data, but the trend is even more important because for CMB, we have seen a trend that is turning better, but definitely, there are also uncertainties, including opportunities and also challenges t here are more uncertainties. As I just shared with you, the uncertainties in the policies and also the challenges. In terms of opportunity, I think the biggest opportunity is the fundamental of the economy is turning better. It's a very certain thing, and it's the most important backdrop of CMB's operation.
And I think the PMI is now over 50. So it has been rising for a consecutive two months. So we are sure that when the economy is getting better, this will be a definite trend. And secondly, the capital market, I think we'll see some positive change t his will also be beneficial for CMB. And thirdly, as real estate and LGFV, the risk on these major areas will be mitigated.
This will be also helpful. And fourthly, people's risk appetite will also change t his will have influence on our loan and also wealth management business, but uncertainties, like I just said, like the NIM, like the debt market volatility, these are the uncertainties, so overall speaking, I think there are uncertainties.
And we are making our plans. I don't have a specific figure to share with you, but the overall judgment is that we hope that we can make progress while maintaining stable operating, and hopefully, the results will turn better. Thank you. Next question, please.
Next question is from Guotai Junan , Asset Management, Mr. Zhou Chengxi.
Thank you. My question is about asset quality j ust now, Mr. Peng also said something about the asset quality on the retail side, and we are seeing on the property side, there are some positive changes. But from the Q3, we are seeing that we don't see much turnaround on the risk on your retail loans. But still, it's under control, I know b ut the trend is not good. So could you please share with us some of the forward-looking data? or the experience that you have been through in the past when you are seeing the volatilities in the retail loan book? And how do you see the new trend?
So firstly, I think that Mr. Huang from our risk management can share with you the overall asset quality. And secondly, I will invite Mr. Wang from our retail loan department to share with us specific data.
And CMB's risk culture has always been stable. And we try to consolidate our risk management system. Our logic or principle is to dispose of the non-performing loans early and first, and then to dispose of them as early as possible. Our NPL now is 0.94 %.
It's down by 0.1 percentage point compared to the beginning of the year. The special mention loan ratio is also down compared to the beginning of the year. Our coverage ratio and also loan provision ratio are still ahead of our peers.
I think that for overall asset quality, it will remain to be stable. In terms of corporate loan, for the first three quarters, asset quality has been stable with NPL ratio 1.05%, down by 0.1 percentage point compared to the peer. NPL formation ratio is 0.43% year on year, down by 0.13 percentage point. I think for the whole year, corporate banking loan asset quality will be stable. And CMB definitely follows very closely on new policies and adjusts our credit policies with the new circumstances.
And also, we are optimizing our structural policies for our regional and our industry credit policy. And to be prudent in terms of manufacturing loan. And so this is a very brief view on that. And next, I will share with you my views on the retail loan. So this year we are more affected by the overall environment.
For the whole banking industry, we have seen uprising for the risk in retail loans. And CMB shares the same trend with the industry. By the end of September, since we are seeing continuous recovery in the external environment, so there are some volatilities for NPL s pecial mention loan ratio for retail loan has risen compared to the half of the year.
But still, I think that the data are still ahead of, better than our peers. As for special mention loan ratio, it's because we have included the loans that the customers will default in other banks into our special mention loan t hat is why we have seen an uprise. It's more of a related impact.
By the end of September, there is a series of policies that have been launched. And we have seen it's possible that the economy can be better. So banks are highly related to the overall macroeconomy. So the performance of the retail loan in the past three quarters is quite the same as the macroeconomy. And I think that definitely with the policy launch, it will turn better b ut it takes time. So in the short run, still, the asset quality of retail is under pressure b ut in the long run, when the policy takes effect, definitely, I think that our asset quality will turn better in the long run.
And for CMB, for us, two things are important on e is to expand our business scale a nd secondly, is to control the risk at the same time s o we have three priorities
then prioritize customer, prioritize customer, and prioritize the regions. And we are using data to optimize our risk system. And we have connected data for around 304 kinds of data to analyze the risk of the asset. And after loan disbursement for regions, which we have seen more volatilities, we will try to focus more on these regions and do more in terms of the disposal of NPLs.
So no matter it's from the onboarding of customer and secondly to following the risk and then after risk for disposal and workout process, we have done a lot of things to maintain quite sound and retail loan asset quality.
Next question, please.
The question will be from Richard Xu Lan.
Thank you for giving me this opportunity. You've just mentioned that some improved expectation of the business, for instance, in the investment opportunities, investment in retail in terms of the retail business. But we still see some uncertainties in the future. For instance, the yield of deposit, the yield of fixed income products.
And at the same time, we still see the uptake of risks in terms of the credit risk and also the other risks in key areas. So for CMB, I would like to understand? your mindset and strategies to the retail customer operation. Has there been any changes? How can you maintain your leading advantages among the peers under such external circumstances?
Thank you for your question. This question will be answered by Mr. Li from the Wealth Management Platform Department. Thank you for your question.
As for your question, this is indeed something that we have continued to have a deep thought. Well, first of all, we have seen that in the market, there are a lot of volatilities happening. From the client side, we can see that their risk appetite has experienced changes. On the one hand, changes are happening within their risk appetite. Actually, the appetite is quite low. Under such circumstances, they prefer more stable and products with more certainties.
So correspondingly, in terms of asset allocation strategy and the structure, we have also experienced changes f or instance, in the Q3, in the AUM growth, wealth management products has accounted for 39%, and for deposit, it accounts for 32% t his is what we have been doing to adapt to the requirement of the client and also the market.
That's what we have been doing to adjust our product mix, but we cannot avoid that the fee income from these products were under pressure. As we are faced with certain difficulties, we think that our coping tactics and our mindset of operating could be answered by the following three aspects, so firstly, as we are faced with difficult market conditions, we intended to be back to the origin to provide better service to our clients, so for these two years, we continue to satisfy their need in deposit, in loan, in the settlement business.
We continue to take our final goal, our fundamental goal, to cultivate the growth of AUM of our customer base. So you can see that the balance of AUM represents an increment of CNY 1.02 trillion up by over 7%. Our market share also continues to grow.
For retail clients, we have already got 2.06 million clients with a growth rate of around 5% w e believe that as the AUM and the customer number continue to grow, we are confident to seize market opportunities and to provide corresponding products and services to these clients as the market develops, and we can synchronize with such pace.
Just now, Mr. Peng also mentioned that we are actually seizing these kinds of opportunities. The second aspect I would like to answer is that to expand our customer base, to expand our relationship manager base, I believe that what we have provided is already quality services h owever, in order to reach even a larger customer base, having quality relationship managers is not enough. It will be limited by the distance we have with our clients w e need to leverage our fintech system. Therefore, we have leveraged our digitalization to develop our business.
We will be furthermore guided by the fintech development strategy and promote the combination and integration of online and offline operation and leverage the large language model to enlarge the customer base that we can serve. This is the second aspect I would like to answer, that is to expand our customer base. The third aspect I would like to say is how to dig deeper into our business.
The difficulties we are faced with is that the AUM yield under such external circumstances, based on customers' appetite, tends to be low. However, we could admit that the market is having opportunities, and customers' risk appetite is also changing i t is dynamic.
We will have the opportunity to provide them with professional and in-depth services, so we wish that we can do more work in the following two aspects. Firstly, I believe that through our professional service, through our three asset allocation service system, we could help clients to make better asset allocation to sail through the cycle to obtain steady return.
The second aspect is that we will further enhance our capability of investment to help our clients to grasp phase-based opportunities, return to origin, to dig deeper into the business, and to expand our customer base. These three aspects are what I would like to conclude to answer your question. I believe that through these three aspects, we can answer better, return better to the external environment t his is basically my mindset. Thank you.
Thank you, Mr. Li. We will have the next question.
The next question is from Citi, Judy.
Thank you for giving me this opportunity. I am Judy Zhang from Citi. I have a question regarding NIM and about the loan growth. We see the repricing, loan repricing casting some influences on the banking industry and CMB to the Q4 and to the next year. I would like to learn from the senior management about the NIM growth and the loan growth of the next year. I would like to see more details about the loan growth and the key sectors that you would like to extend loans to.
The answer will be taken by Ms. Li.
To see from the first three quarters, our NIM is 1.99% under the group wise, down by 20 basis points year on year, but we still remain at a good level among our peers to see the absolute figure. To see from the factors that influence our NIM, it's basically in the downward trend of the yield of our assets. Of course, it is influenced by the policy fundamentals, the LPR cut, the existing mortgage rate cut t hese are all policy-side factors, and also, insufficient effective credit demand. It is also related to lower NIM.
In order to look into the NIM of the Q4 and the next year, we see that since the new policies launched after late September, this will definitely influence our structure and our development of the NIM, and generally, I believe the impact could be, say, neutral.
The existing mortgage rate, CMB has quite a large proportion along with the LPR cut and other influences, and also, the recovery of the credit demand also takes time. For the next year, our low pricing is still in a downward trend, which also will catch influences on the NIM generally. We will take active asset liability measures to guarantee a stable growth of our NIM, so generally, to see our mindset, firstly, we will maintain quality asset origination to maintain stable asset growth. This is from the scale perspective.
Just now, you have also mentioned that our loan growth has experienced some changes. For sure, under the external environment, the demand of credit is quite weak. The renminbi loan is also experiencing year-on-year decrease in terms of the increment. I think that the major decrease in increment is basically from retail loan and from mortgage loan to specify.
Also, for credit card loan, it is also influenced by the weaker demand in consumption. It is also decreased in terms of its scale. We believe that this is for this year. For the corporate loan, its performance is better than that of the last year.
To see from the demand side of the whole society, there are some positive changes. The residents' consumption transaction volume has experienced some increase e specially, the transaction volume in the National Day holiday has also proved that increase f or the property market, there are some new policies introduced. So the transaction volume has also increased. There are some marginal changes.
We also see some support from the national policy to corporate loans. For instance, the stock repurchase, relending facilities, some stimulus related to the upgrade of large equipment, about the consumption policies. The general credit growth, I believe 2024 is a year that is under huge influence of the policy.
Looking into the next year, I think the outlook is quite good. On the second aspect for asset and liability management, I think the key for our work is to manage a good structure to maintain a good growth of quality assets to high-yield assets. For the loan structure, bill financing proportion and the yield is quite high. We will guarantee the growth of general loan with less growth on the bill business. For the corporate loans, we will put our focus on key areas that are under the national policy supports and key regions f or liability management.
We have realized some optimization. It is benefited from the policy factors and also benefited from our active management to obtain low-cost funding and low-cost deposits. In the next year's liability management, we will continue to promote customer acquisition to extend our business in some scenario-based business.
For instance, the growth of deposits in the low-cost funding from settlement scenarios, etc., and seize the opportunities to increase the proportion of our demand deposits. Also manage the terms in terms of the duration of different liabilities and further optimize the overall structure and maintain a stable NIM development i have one point to add. You have mentioned that you would like to understand more about loan growth.
I think CMB is following the trend of the whole society. The growth rate decreased. It's a little bit down compared with the expectation. There are some backdrops that is to avoid funding going not to the real economy, etc. So in my opinion, for the year 2025, CMB's loan growth will still be similar to that of the external environment. If I would say, our loan growth performance will be better than that of this year in the year 2025.
That is the first one. For the second one, the retail loans proportion, we also will aim to increase. We will continue for the next year to guarantee the growth momentum of the retail loan for the year 2025. Next question, please.
Next question is coming from China Merchants Securities, Mr. Wang Zhijian.
Thank you. My question is for the operating expense. I think one of the key advantages of CMB is fee-based income and also the funding cost. But in the long run, I think the advantage coming from your investment into technology and human resources. So these are more reliance or have more reliance on the operating expense.
But now we have seen the Q3, on year-on-year basis, the operating expense has been down by over 10%. So this kind of very obvious decline, whether it will affect your investment into digital and into financial technology and into your human resources? Thank you.
In this low interest rate and low fee-based income environment, one of the experiences that we have learned from other very international banks is to control costs in a more precise way. We have done investigation and also have an investigation into the international advanced peers. This year, I think very importantly for us is how we can better manage costs to go through this difficult cycle. And this year, we have set up a small team in the bank to proceed with the work of the reduced costs and to improve efficiency.
So from the first three quarters, we have seen the operating income has been down by 4.56%. And for the Q3, standalone quarterly is year-on-year basis is down by over 10%. The decline is also a benefit from the work that we have done to better and more precisely control costs. And secondly, I think the cost is quite in line with the operating income. When operating income faces difficulties, definitely there will be a decline from the cost side. And thirdly, I think for quarterly basis, the speed of the expense is different.
So some quarters, we speed up, and some quarters, you might see some slowdown. But one thing I want to clarify is that when we are precisely managing costs, we will not sacrifice the experience of our customer. And also, a very example is that to dim out or shut down the light in our outlets so that customer service will not be good with us t his is not the way that we do manage costs.
Namely, what we are trying to do is to use technology to replace some of the traditional ways of doing work. So this is how we manage costs. We don't sacrifice customers' experience a nd secondly, we also do not sacrifice our employees' experience with the bank.
An example with you, such as for discount for when our employees are traveling, when they're buying air tickets, we encourage our employees to buy more air tickets with a lower discount. But definitely, it will not be the same air ticket, but just because we have a more bargaining power, so it should lower down the traveling costs.
So we don't sacrifice the customer experience and also the staff's experience with the bank. So to maintain the cost and to improve efficiency, it will not be a short-term strategy. I think we want to embed this philosophy into all workflows and also including our culture. So it's a brief answer to your question. Next question, please.
Ms. Xiao Feifei from CITIC.
Thank you for giving me this opportunity. Follow-up question on Mr. Peng j ust now, Mr. Peng, you said that you will continue to make efforts on growing the retail loan. But from the demand side and also from the risk side, I think that we don't see much recovery or turning point on that.
So is it possible for you to clarify on what's your strategy or rationale behind your strategy to increase your retail loan? And secondly, I think that investors think CMB's business is highly related to the capital market. And since 24 September, there is a very obvious improvement in the capital market. So what will be CMB's strategy in terms of wealth management, in terms of your asset management, asset allocation after the new changes have been taken place?
So your question, I think there are two points. First one is retail loan. So retail loan includes both retail loan and also credit card business. And I will invite Mr. Wang to share the views on you.
For retail loans, the strategy, I think for the past years, we have been emphasizing retail loan for all the time, including risk management, including investment into technology. So by the end of September, our retail loan, no matter if it's for the incremental loan growth or the stock loan work, we are quite ahead of peers in terms of scale.
And secondly, I think we will follow the following aspects. Firstly, in a more volatile external environment, asset quality is the top priority. So I think that to guard against the bottom line of risk is a very important thing. So we will put more resources on better areas and better customers. And secondly, at the same time, to make sure that the asset quality will remain ahead of peers.
Secondly, follow very closely on the dynamics of the market to seize the short-term opportunities l ike after 24 September, there are some very positive changes, like in Beijing, Shanghai, Guangzhou, Shenzhen, and Chengdu. The transaction volume has been grown quite much. I think we will seize the structural opportunities to extend more loans. For October, I think that for October alone, the business that we have, new business have come into us, have been up by around 50%. And at the same time, we are making pre-arrangements for next year's strategy in terms of secondhand houses.
In the past, the secondhand loans for secondhand loans, the proportion has increased continuously recently. And this year, for incremental loan, around 46% are coming from secondhand. And next year, I think we will take these structural opportunities. Definitely, we'll increase the proportion of the loan growth in a secondhand home.
Next year, I think when interest rate is down, it's very important to do early loan disbursement. Thirdly, very important is to apply big data to risk management and strengthen risk management f or all the time, CMB lay emphasis on risk management is the top priority.
I think we will continue to connect to different data to monitor the asset quality and to do better in terms of pre-warning. I think in these circumstances, strengthen risk management is the top priority for us. I think that by doing all this, it will help us to maintain our asset quality to be ahead of peers. In terms of pricing, we will do risk pricing to reclassify the customer and have a differentiated pricing for different customers. By mitigating risk, have a different pricing strategy t his will also help.
As for credit card, I think two aspects. One is asset quality, and the second one is business growth. First one, for asset quality credit card, I think the asset quality is quite stable currently. For some indicators, they're also slowing down. The NPL, 1.77%, is down a little bit compared to the end of the second half.
For NPL formation ratio, year-on-year basis is down by over 10 basis points. So it's all within our expectation f or early indicators, you may have noticed that special mention loan ratio and also the overdue ratio ha s been up a little bit compared to the end of the second half.
The main reason is because we are very strict in terms of how we classify risk because we think the external environment is more complicated, affected by jobs, by income ratio. So I think that risk is still at quite a high level with more volatilities t hat is why we have done more in terms of pre-warning f or some customers, how we classify them, we have even more strict rules. So that just can be reflected on the rise in overdue and also special mention ratio.
But overall speaking, I think it's stable. And I think that in the future, our asset quality will remain stable b y the end of this year, I think for NPL and also NPL formation is trending good this year. And secondly, for loan growth, our credit card loan growth is still down compared to the beginning of the year by the end of September. But for three consecutive quarters, things are turning better t rend is good.
So even though we are seeing negative growth in loan, but in terms of structure, we are seeing more growth in terms of installment loans. But for transaction-related loans, it's more affected by transaction volume i t's quite in trend of the overall society. And in terms of when we compare to the industry, the decline level is lower than the industry level.
And now we have seen policies have been launched. And I think it will take effect. And with these or the new policies coming out, I think that the transaction-related loans will see new momentum. In October, we have seen already positive growth for credit card loan. So for the next step, I think we will continue to optimize the customer structure and to have a more balanced portfolio. In terms of customers, we focus on value customers, dynamically adjust our customer structure and to acquire more quality customers i n terms of asset quality, we will lay more emphasis on mid- and low-risk assets.
And in terms of the workout process, I think workout is a very important area i think we will definitely use data and also technology to improve the efficiency to make sure that we have a balanced development among asset quality, efficiency, and profit a nd asset quality will be the top priority t hank you.
And as for the capital market, for capital market, there are some I think it affects many areas. One is for the re-lending loan for the repurchase of the stocks. PBOC have released the policies w e acted very fast and swiftly. So namely, I think it's important to service customers for listed companies. That is why we are very sensitive to this policy.
I think on 20th October, there are 23 listed companies say they will repurchase the stock from the market. At that time, we have already extended loans to six of them, including companies under China Merchants Group and also companies outside China Merchants Group.
And from now, I think currently it's moving quite the program making progress, continue to make progress because we act fast and act swiftly. This definitely has brought some opportunities to us. It's moving quite smoothly a nd secondly, for wealth management, just now I have said quite a lot about that because CMB has put extensive wealth management at our emphasis and emphasis on building the capability in this regard. So including how we select products.
Like the mutual funds, how we select the products, and also in terms of the team building and customer, we have quite a solid foundation for that. Once the trend is confirmed, definitely it will help us in terms of the customer base, in terms of our AUM growth, and also fee-based income. But I think that the impact on capital market definitely will also have a positive impact on custodian business.
For the new two batches of new A500 funds, I think CMB is the bank that has acquired the biggest share in terms of the custodian in this regard. So capital markets' impact will be on all funds. So definitely CMB's business is more related to capital market o nce the trend is confirmed, we definitely can benefit from that. Thank you.
Thank you. Next question, please.
The next question is from Goldman Sachs, Claire.
Thank you for giving me this opportunity. I am Claire. For the Q3, we see an overall stable asset quality. I would like to learn more about the overall trend. Which side would be under more pressure of risk exposure Is it retail or corporate? And what? is the real estate sector's risk exposure condition? We see some quarter-on-quarter growth in terms of the NPL condition. And what is your outlook towards the asset quality? And what is the turning point of it?
Thank you for your question. The real estate sector is indeed a very key area that everyone pays attention to. CMB has been very cautious to the real estate sector, and we have early exposed such kind of risk early since the year 2021 and act in time to dispose assets and make sure that we have sufficient provision by the end of September, as Mr. Wang just introduced. Under the bank's caliber.
We have CNY 294.2 billion corporate real estate loan, and the proportion was 11.76%. The NPL ratio was 4.8%, two basis points higher than the last quarter, but it's also already declined compared with the end of last year. It is mainly because that the real estate sector's loan scale generally decreased. Our NPL ratio for the real estate sector increased a little bit compared with the end of last year, so generally for the real estate sector, under a package of series policy stimulus, we believe that the bottoming trend will be stable.
For the provision of the real estate sector's loan, it is 2.5 times higher than general corporate loan. To see from the policy side, they both provide stimulus in the demand side and supply side w e pay special attention to the demand side. It is also a core for the future development of the real estate sector so that we continue to make deep analysis on regional basis, on the industry basis.
Because we believe that in this region, it is China for Chinese commercial banks i t is a key area that we should attach importance to, attach strict management to, to focus more on the market, to focus on the construction of affordable housing, and to focus on the new models that the central government aim to develop the real estate sector and further develop our business in a steady, profitability-driven, and stable manner. Firstly, we will further deepen our strategies and distinguish the risks arising from the real estate enterprise and real estate projects.
As long as the project is compliant, we will provide corresponding support. Secondly, we will satisfy the financing need of these compliant and qualified projects. On the second aspect, combining with this time's policy launched, we will continue to focus on key clients and first-tier and second-tier cities because this real estate sector is highly relevant to regions. For the third aspect, we will strengthen our management.
Since the year 2021, we have emphasized on this aspect to make strict control and management over large exposure clients and through a full-cycle risk management to realize a safe management of our exposure.
For the fourth aspect, the real estate sector has experienced ups and downs, and we see some existing risks arising from the previous periods f or these type of clients, we will act accordingly based on different clients' risk profile and seize more on the project, seize more on the effective rights of the projects to revitalize these projects and reduce the exposure arising from the bank and to better help the delivery of those housings. This is basically our strategies that are going to adopt in future development.
I think there is another question from the previously asked one. I have something to add. Currently, our asset quality pressure, real estate is still one of the key areas that we attach great importance to. For instance, the infrastructure construction industry that is relevant to the real estate industry, and just now, the department has from the retail loan business and from credit card business, consumer loan, small micro-sized loan.
These areas arising from the retail loan are also key risk areas that we will pay attention to from NPL formation perspective and from the perspective of the balance and ratio of NPL. These are all aspects that we will pay more attention to, and of course, the fast disposal of NPL, the compliant and fast disposal of these NPL is also what we will take in terms of our measures to better settle this kind of-
aspects w e will continue to maintain what we have been doing, and for the first three quarters, we have already disposed of CNY 46.7 billion NPL, which is CNY 3.1 billion more than the previous quarter, and we will have the next question.
The next question is from CICC, Mr. Wang Zhiyu.
Thank you for giving me this opportunity. I am Wang Zhiyu from CICC. I have a question about the competitiveness of the corporate finance business. We see weak demand in the retail sector. And we see some news reports that the corporate clients of CMB have already surpassed 3 million. Some investors have already an impression that CMB is doing good in retail business, but they don't have much idea about our corporate business s o I would like to learn more about the competitiveness and the development condition of our corporate finance business.
Thank you for your question. Indeed, the market might not have many impressions regarding the corporate finance business rather than the retail finance business. As we are facing with fierce market competition, our corporate finance has experienced some transformation. And in such a process, we have formed our competitive and differentiated strengths. On the one hand, we have developed a service mechanism that is based on segmentation and classification.
For corporate customers, it is quite obvious that they're belonging to different groups and different segments. And for some special clients, for instance, listed companies, we believe that by focusing on segmented-based operational philosophy, we can better exemplify the value of clients.
In terms of customer operation, we have summarized some experience based on the communication with our clients. And we even developed more accurate customer portraits that help us to better seize the opportunity that arises from our customers so that our solution could be more accurate, could be more competitive, and could be more satisfied and received by our clients.
And during the whole process, we have also made good achievements. As just you have mentioned, our customer number of corporate customers has already surpassed three million. But at the same time, we are also optimizing the structure and quality of our corporate clients. Second, the integration of our investment banking and commercial banking business, the integration.
Based on our understanding and accurate understanding of customers' needs for the past years, we have further refined our products and developed relevant competitiveness in niche areas. The third aspect is our professionalism, industry-based professionalism. We have established a special department called the Strategic Client Department that is specifically focusing on top-tier clients within the industry. And strives to build an advantage of our customer operation that is based on industry-wise.
If we can grasp the trend of industry upgrading and grasp the need from the top-tier clients of the industry, we are able to deliver and cultivate our capability to serve this kind of clients and to serve this trend. The fourth aspect is that the one entire bank for one customer strategy.
For traditional commercial bank in China, while sometimes we provide services to group-based clients, there are some barriers t here are some silos between different branches across provinces, across cities. So in reality, there are some quite obvious trends in the industry transfer. And some top-tier clients, they tend to focus on operation in certain regions.
There are some proofs that when we serve our top-tier clients, they tend to bring the whole group moving from one region to another. So this is a trend that we observe. We have built our unique one entire bank for one customer platform.
nd focus on the industrial chain customers along the top-tier clients within certain industries and provide unified, standardized services to our clients, such as settlements and clearings, etc., and help those small and medium-sized enterprises solve their difficulties in getting financing. Fifthly, to cultivate our capabilities of digitalization, one is the online operation of our products a nd secondly, our business model.
We continue to follow the People+ digitalization business model, especially as we focus on delivering such kinds of services to basic-level customers. And the third aspect is about the tools and the systems. We have got a CRM 4.0 system that is the Customer Relationship Management System. It is a very good proof for us having a strong capability in terms of digital infrastructure.
And sixthly, the integration of our market line and risk line. They have formed such a kind of consensus that is very important to how large we can provide services to our clients in terms of the range, in terms of the business types, in terms of the risk that we choose to bear in choosing clients, in choosing industry, in choosing products.
We have continuously adopted this kind of method to better choose our clients based on our understanding of the industry, based on our credit policies, to establish our own name list of choosing strategic clients that we aim to allocate more resources on to guarantee that we can have a healthy and quality development of our corporate finance business. And finally, we believe that the above-mentioned factors can form a very systematic mechanism which could be added by our corporate culture.
We always believe that the corporate finance business doesn't have a shortcut. We would always control the risk to provide better service to our clients, to refine our product, to refine our system so as to achieve a stable and healthy growth of the corporate finance business. Next question, please.
The next question is from Guosheng Securities, Chen Huiqing.
Thank you for giving me this opportunity. I'm from Guosheng Securities. My question is about NIM. Just now, you mentioned about the NIM side. You said that LPR repricing could have some impact on that. And may I know whether the impact effect from the deposit side is also taking effect? So do you have any forecast that NIM will be at the bottom and turn around next year?
And secondly, for wealth management, for the first three quarters affected by fee cuts, the industry's wealth management-related fee income has been quite weak. It's also the same for CMB. And after 24th September, as we have seen, Q4 last year had a high base, Q3 had a high base, but Q4 has been low. And now you don't have the base effect, whether you are seeing a better trend for fee-based income.
Thank you for your question. I think that Ms. Li will answer the NIM side, and also Ms. Sun will answer the fee-based income.
Thank you. Just now, for NIM, I just said that in order to support the economy, the policy side has guided down the LPR and also adjustment of the stock of mortgage, which definitely will have some impact on the bank's NIM, especially after 24th September.
We're seeing there are further continuous declines of LPR as well as the pricing for stock mortgage, but definitely, there are policies on the deposit side. When we're taking all that together, the effect on the deposit side definitely will have some offset of the decline on asset yield. So this year's impact will be quite neutral, and next year, for LPR, continue to decline, and the repricing on the stock mortgage definitely will have some pressure on the asset side, and definitely, we'll have pressure on our NIM.
So for next year, I think from the current point of time, I think that we are continuing to face downward pressure on NIM b ut the magnitude of decline will be smaller compared to this year. And if there are no other policies, we think that next year's NIM will be stable, will become more stabilized. But it's depending on external policies.
And for us, I think we will take more active asset management policies, such as to allocate more resources to quality assets and to control the cost and to improve the proportion of demand-deposit ratio so as to maintain our advantage or a decline of the funding cost. Thank you.
For your second question, as the trend for CMB's fee-based income for the Q3, I think that for wealth management, we are seeing the decline magnitude is narrowing down. For the first three quarters, it's down by 27% compared to the first half i t's down by four percentage points b ut for the Q3 alone, year-on-year basis is down by 15.98% t he level of decline is also narrowing down.
I think the major impact is coming from fee cut on the insurance side because last year, we had a higher base on insurance s o on a year-on-year basis, we are seeing the base effect. In the Q4, as you are quite concerned about the trend, definitely, this base effect is diminishing, and we are quite confident that for wealth management, fee-based income, the decline level will continue to narrow down, but definitely, there are challenges.
In September, for the insurance products, there is some adjustment on the yield. Demand has been quite big in September, which means we have front-loaded some of the business growth in September in the Q3. But also at the same time, we continue to expand our customer base and also asset allocation for our customers w e have seen, in terms of sales volume and market share, we have seen progress made in terms of the insurance side.
But policies have been launched after 24th September, which definitely have some positive impact on our wealth management, provided our opportunities, which means that we need to seize the opportunities, like the recovery of investors' confidence in the market, especially for equity-related products. Recently, we have seen this kind of trend.
We have seen higher growth for equity-related trends. For equity-related funds this year, our market share has been up by 40 basis points and has reached a new high in the Q3. So facing the new policies, we will continue to maintain our strategy in terms of wealth management, namely to do more asset allocation and to grow more high-net-worth customers as well as AUM growth. We are confident to face this opportunity next year and to maintain the trend, which is I think the trend will get better for fee-based income t hank you.
With all that said, I think it's more vague what they have said before. So because we cannot share with a specific data with you, but my view is that, firstly, for NIM, as I said before, that the decline magnitude will narrow down. This is a trend. This is quite certain.
And as I said now, the uncertainty is the external policies. So if there are no further policies launched out, then it's possible that next year, NIM will reach the bottom b ut we are seeing new policies recently, like the LPR adjustment, like the repricing of the stock mortgage. So next year, I think that NIM will continue to face pressure, but the decline magnitude will be better than this year. Secondly, for fee-based income.
Because for the three quarters, it's mainly affected by insurance, and the other is by the mutual fund. And these are more affected by policies. And policies have been launched after last year. So Q4, I think this impact is becoming smaller, much smaller.
But this year, definitely, we tried a lot to have a higher volume in terms of business to offset the decline on fee-based income s o I think the trend will continue to see that the decline level will narrow down b ut whether it will turn positive still depends on the capital markets' trend, whether it will be a certain trend that the capital market will turn around, and whether there will be further new policies coming out. So it's hard for us to give you a certain answer. But what is certain is that the decline magnitude level will narrow down. Thank you. Next question, please.
Next question is coming from Gary Lam.
Thank you. My question is about the RWA growth rate. So, the RWA growth rate for the Q3 has declined compared to the half-year end and your core ratio? So what will be your forecast for future RWA growth rate? Just now, you said that in 2025, you might speed up the loan growth rate. So what will be your forecast for the RWA growth rate for 2025? Thank you.
I think everyone is very interested in the RWA's changes. By the end of the Q3, for the weighted approach, for the internal rating approach, our RWA balance is around CNY 6.6 trillion, up by around CNY 50 billion compared to the beginning of the year g rowth rate is 0.7% and is 10 percentage points lower than the same period of last year. It's also down compared to half year end.
There are some reasons behind the reasons i n terms of year-on-year basis, we have a very low growth rate t his is mainly affected by the new capital rules, especially in the transition period. Over the bottom line part, that should not be added back to the RWA. This is why, on a year-on-year basis, we have seen quite a very slow growth in terms of RWA, mainly affected by the new capital rules. Secondly, it's affected by the business structure changes.
Just now, we all mentioned that under this year's circumstances, we are seeing slower growth in terms of loans. So that is why RWA growth is also lower. And another very important reason is for the contingent assets w e are seeing a decline on that part, which is also a reason why the RWA loan growth has declined for the contingent asset.
This is mainly because we have done adjustments into our asset structure. We reduced our bill discounting business because this part, yield is very low t hat is why we control the total scale on that part. That is why no matter it's for the RWA, that is coming from the bill discounting business has come down. And thirdly, it's mainly we strengthen our precise management on capital according to the new capital rules.
For the retail credit line that we offer to customers, we also take up the RWA, but we have more precise management on that, and we improve efficiency on that. So this is also the reason why we are seeing more conservation on capital on that side. And another reason is that for fundamental data, we have better management and to save more cost on capital side, which also helps to save the RWA growth rate.
This is why we have seen changes on RWA side. And since RWA growth rate is slowing down, that is why you are seeing no matter it's a core ratio or core ratio, we have seen improvement on that. With this trend set, what is our consideration for the future growth rate? No matter it's for I know you are very interested in the dividend payout ratio w e are starting on that.
Currently, our dividend payout ratio is already the highest among listed banks, and for us, we want to have continuous and stable dividend payout ratio. It's even more important than the absolute amount, so I think we'll take into consideration from investors' demand and also our capital level and continue to start on that and to flexibly adjust on that. Thank you. Next question, please.
The next question is from J.P. Morgan, Ms. Li Li.
Thank you, senior management. I would like to know more about the dividend payout. You have just mentioned that your view on dividend payout as the central government actually increased the dividend payout of listed companies. And as you have quite an adequate level of capital adequacy ratio and quite high capital adequacy ratio compared with your international peers even, do you have any plans? to consider the stock repurchase and etc.?
Indeed, stock repurchase is a very important measure to promote the development of the capital market. Recently, we have also been asked quite frequently. Indeed, we are doing some research in these issues, in these topics. We believe it is a direction that we can go forward, but we have to admit there are many influencing factors within our consideration. I believe the major difference is that listed companies and listed banks are different.
For banks, under regulations, they have many limitations and restrictions such as the capital level and etc. I have also seen some other listed banks within the Chinese market, and they have not taken any measures relevant to stock repurchase. We have the capability to do so, to do a higher dividend payout ratio, to conduct the stock repurchase.
We are able to do so. However, there are some other factors that we have to take into consideration. So therefore, we will continue to study on this project to these issues. It is not what we want to do, then we can do it. Thank you for your question.
So in order to ensure the participation rights of individual investors, we have collected some questions from them by email. And as most of the collected questions overlap with what we have just discussed, so we will pick one representative question to answer. So please have the staff read the question we collected beforehand. The investor's question is that as CMB's extensive wealth management business and the demand deposits proportion is closely relevant to the capital market.
I would like to understand that the changes in the stock market before and after the National Day holiday, what changes, what influence will it cast on the income of CMB's, wealth management fee income, and your demand deposits proportion? Before that, I have answered somewhat about the content of these questions in my previous answer.
However, for the detailed influence about the wealth management fee income and the proportion of demand deposit is too detailed to answer. I believe that the A500 ETF, the sales volume, could somewhat prove our point. Our market share accounts for over 50%, so that our professional capabilities in selling fund products have further proved, and it will indeed contribute to the relevant income in the extensive wealth management business. So I wish that maybe we can save this response about the detailed income, the detailed proportion within our annual report.
And at the same time, about the capital markets' influence on the proportion of our demand deposits. Up to now, our savings deposits increase has experienced quite good growth. It is a good momentum we see. But if you want me to clarify what growth is brought by the capital market, what growth is brought by other factors, it's hard to tell. So I think it would be better that we can respond to the question in a complete manner in our annual report. Due to time limit, we will now have the final question. Please have the last question.
The last question is from China Securities, Mr. Ma Kunpeng.
Thank you. Senior management, I am Ma Kunpeng from China Securities. I have a general question for you. For the first three quarters, the banking industry is under quite a difficult operating environment, but we see that under the challenging backdrop, you have still been doing a good job in constructing your customer base, and you have achieved good results, AUM growth, customer growth.
You have all secured that. And in terms of our financial indicators, you have made your efforts. And we believe that this hard time will pass. And we also see some good signals. Just now, you have also mentioned that as well. And so my question is, I have a quite inclusive question. What kind of internal capability that we are cultivating in terms of facing these challenges? and what preparation have we been making to prepare for the bottoming out of the industry? Thank you.
Thank you for your question. It's a very comprehensive one. Also a good one for us to complete this conference. You have mentioned that hard times will pass. I highly admit that i highly agree with that. Whether or not hard times will pass, it will pass s o at the current stage, we need to cultivate our internal capability.
It means that we need to strengthen our capabilities at all levels and wait for the good time. So for the past years, especially this year, we have taken deep consideration, and we have been developing in focused aspects and areas. I will speak in a general manner and then focus on several points. So generally, we have stronger capability of strategic implementation. It is guaranteeing how can we further implement to achieve our strategic goal. This is what we need to construct.
Well, to be more specific, it means that we need to maintain our strategic positioning w e need to maintain our long-termism. We need to focus on the three fundamentals of asset quality, customer base, and market orientation. And the second aspect is to enhance our innovation capability. This is what we need to focus on in the current period of time.
When the time is difficult, it is even more important for us to focus on innovation-driven development. Later on, I can ask one of my other colleagues to further answer that part. The third part is customer service capability w e need to focus on their needs and the changes of their needs to enhance our service capability to all customers, all products, and all channels to realize in-depth operation and value creation of customers. And for the fourth aspect, we need to enhance our management capability, for instance, asset liability management, capital management, cost management, and etc.
The fifth part is our team management capability. This is to answer in a quite general manner due to time limit. I have to answer in that way, but I also have special points to focus on to help you better understand and some ideas that are quite representative. The first one is the operational capability.
How? could we leverage on our operational capability to build a better operation platform to support the high-efficiency development of our business, For instance, in this year, we have constructed a five-dimensional, or we should say five-angle operational model to help realize high-efficiency management and to generalize to generate more value for our clients. The second one is about digital-based management. The fourth one is about operation in a safe manner. The fifth one is about operation in a manner with a higher level of staff satisfaction.
The five-dimensional operational model can better support our business development. We have also developed another platform called Profitability Plus. Based on our traditional operation, we need to further take consideration on generating profits.
For instance, for cross-border finance, we have been developing very good in this year, and the Profitability Plus platform has played a very important role within. For some other perspective, they are also benefiting from this platform, such as our outlets, such as our payroll business, and etc. To cultivate our operation capability is quite important i t is also a capability that is going to be further tested in the future development of the banking industry. The second aspect is about the cost management, refined management of our cost.
Just now, I have mentioned some of my opinions and ideas. In terms of our management, I mentioned that cost-to-income ratio needs to be brought down, but it is not the case that the lower, the better. The cost-to-income ratio is not about lowering the cost. The key is to enhance the efficiency.
I mentioned seven key aspects that we need to focus on i t is not something that we can finish in the short run. It's a mid-to-long-term task. It is something that we are taking as the bank's culture to further promote it to all staff in the bank. And the third aspect is about the coordination capability within the bank, within the group.
Across different business lines, across domestic branches and overseas branches, across the bank and other subsidiaries, we need to coordinate among these different entities. We need to further optimize the mechanism, the management mechanism, the procedure, and etc. And we have initially achieved satisfactory results.
For instance, the stock repurchase facility, we have already provided support to six clients, and among them are some entities from the China Merchants Group, such as China Merchants Ports and etc t hey are receiving the financing support from China Merchants Bank. We have also coordinated with our other subsidiaries, such as China Merchants Securities and China Merchants Funds, etc. For the next point I want to mention, it's about the technology capability. For that part, I would like to invite the head of our Digital Finance Development Office to provide more detail.
China Merchants Bank has always followed a principle that is the bank's development is based on the technology development and let the digital development to further guide the development of the business. We have continued to maintain a high input in terms of IT.
Our IT infrastructure construction has always followed the five principles, that is, online, digitalized, platform-based, ecological, and data-based principle of development. Our online operation development has been proved quite successful as we have already mainly chosen to provide services to our clients through the online channel, which is delivering services to over 95% of our wealth management products are realized online.
And recently, the A500 ETF, we have achieved quite good sales. The online channel has been very significant and important to promote the sales of the A500 ETF, and in the bank-wide, over 60% of our staff are leveraging the bank's instruments and tools to conduct big data analysis. We have also developed a special talent team that includes 300 people to further develop such kind of business.
CMB is also the first batch of banks to realize the full-scale cloud migration, and the reliability has achieved a high level of over 99.999%. For this year, utility business-related scenarios that CMB has provided support to over 40 million customers. And for the Cloud Treasury management business, we have also delivered such kinds of flagship products to our clients.
The AI is also a key area that we will focus on. And we have proposed a general mindset for our future fintech development w e need to embrace the new round of AI revolution and to further our input in developing AI and our business to develop into the Smart CMB, to Digital CMB. We have developed these scenario-based solutions to our clients, and we have developed clusters based on the cloud and carry on multi-billion-based model training.
We have brought online many LLM applications, as many as over 630 and more that cover risk management, retail finance business, corporate finance business, etc. And we strive to build our capabilities in these areas.
Our smart AI assistant covering the payroll finance business has already delivered to many of our staff and many of our clients. And over 6,000 programmers are using relevant tools to deliver LLM models and helped over 100 LLM-related enterprises to communicate with us and further developed our capability in this area to further build CMB as a smart CMB to further realize our goal to build a value creation bank.
Due to time constraints, we will now conclude today's meeting. For more details, you may refer to our third-quarter report that we have already posted online. And for more questions, you are welcome to communicate with the CMB IR team. Thank you once again. Goodbye.