Dear investors, analysts, friends from the media, good morning. CMB 2025 annual result announcement will now begin. I am Head of the Office of the Board of Directors of China Merchants Bank, Xia Yangfang. We have released the 2025 annual result last Friday. This conference will be carried out both offline and online webcasting. Now, please allow me to introduce the attendees of today's on-site meeting. Sitting on the podium, they are Mr. Miao Jianmin, Chairman. Mr. Wang Liang, President. Mr. Peng Jiawen, Executive Vice President, CFO, and Secretary of the Board of Directors. Mr. Xu Mingjie, Executive Vice President and Chief Risk Officer. Mr. Zhou Tianhong, Chief Information Officer. Joining on-site and online, we also have Non-Executive Director, Mr. Zhu Liwei. Independent Director, Mr. Tian Hongqi, Mr. Li Chaoxian, Ms. Li Li, Ms. Huang Yushan.
Huang Yus han, and Mr. Lu Lip ing, and also relevant head of departments of CMB. On behalf of CMB, I would like to extend warm welcome to your participation. Thank you for your long attention, support, and investment in CMB. Today's meeting will have two sessions. One, we will invite Mr. Miao and Mr. Wang to introduce the bank's 2025 result, which takes around 30 minutes. The second part is the Q&A session, which takes around 1 hour and 30 minutes. The meeting will be provided with Chinese to English simultaneous interpretation. Now we will hand the floor to Chairman Miao and President Wang on CMB's 2025 performance.
Dear investors, analysts, friends from the media, good morning. Welcome to CMB's 2025 annual result announcement. Today's result announcement will be introducing contents of three parts.
First, I will introduce the group's 2025 annual results, and then I'll give the floor to President Wang to introduce the operational information. Then I will briefly introduce our outlook and strategy for the year 2026. In 2025, we stick to quality, efficiency, and scales coordinated development and strive to build the world-class value creation bank and speed up our transformation towards the four initiative development and promote high quality development, maintain good operation amid stability and strong resilience and innovation vitality, which was reflected in five parts. First, we remain steady in terms of our operation, and we cope with the downward trend of the interest rate, insufficient demand and growth pressure. Our revenue and profit realize both a dual growth. ROAA and ROAE maintain leading in the industry.
Net operating income, RMB 337.2 billion, up by 0.05%. Net profit attributable to the bank's shareholder, RMB 150.2 billion, up by 1.21%. ROAA, 1.19%. ROAE, 13.44%, down by 0.09 percentage points and 1.05 percentage points year-on-year. Net interest income, RMB 215.6 billion, up by 2.04%. NIM was 1.87%, down by 11 basis points year-on-year, with a narrower reduction and maintain a leading level in the industry. Influenced by the fluctuation in the bond market, non-interest income, RMB 21.7 billion, down by 3.31% year-on-year.
Among which net fee and commission income increased by 4.39% year-on-year, which is recording the first positive growth since the year 2022. We seek to refine management and continue to promote reduction in cost and maintain a cost to income ratio of 32.01%. Secondly, we maintain growth in asset and liability and maintain our advantages in low funding cost. Assets exceeding RMB 13 trillion. Total loans and advances, RMB 7.26 trillion, up by 5.37%. General loan, RMB 6.94 trillion, up by 6.57%. Total liability, RMB 11.79 trillion, up by 7.98%. Total customer deposit, RMB 9.84 trillion, up by 8.13%.
Demand deposits daily average balance account for 49.4% remain at a high level. Interest-bearing liabilities average cost ratio 1.26%, down by 38 basis points year-on-year. We maintain our advantages in low funding cost. Thirdly, we consolidate our structural advantages and have strong capital strength. Non-interest income accounts for 36.08% maintain leading in the industry. Net fee and commission income accounts for 61.85% of the total non-interest income. Retail Finance makes over half of the contribution. Its net operating income and pre-tax profit accounts for 56% and 50% of the total. We also maintain quite good level of CAR under the advanced measurement approach.
Core Tier 1 CAR, Tier 1 CAR, and CAR were 14.16%, 16.51%, and 18.27%, down by 0.7, 0.97, and 0.81 percentage points compared with the end of last year. Under the weighted approach, the Core Tier 1 CAR, Tier 1 CAR, and CAR were 11.92%, 13.9%, and 15%, down by 0.51, 0.73, and 0.73 percentage points compared with the end of last year. All levels of CAR's decrease was mainly influenced by the interim dividend payout and the reduction of OCI. Fourth, asset quality remains stable and risk compensation capability remains robust. NPL balance RMB 68.2 billion, up by RMB 2.6 billion.
NPR ratio 0.94%, down by 0.01 percentage point. Credit card 0.6%, down by 0.05 percentage point. Allowance coverage ratio 391.79%, down by 20.19 percentage point. Loan loss reserve 3.68%, down by 0.24 percentage point, maintaining a high level of risk compensation capability. Fifthly, we strive to build a digital and intelligent CMB and actively practice ESG philosophy. We focus on AI, increase IT input and talent reserve. In 2025, our IT input was RMB 12.9 billion, accounting for 4.31% of the bank's net operating income. R&D personnel exceeded 11,000 people, accounting for over 9% of our total employee.
We have an open mindset and embrace cutting-edge technology, rollout, and implement application, and strive to build up our AI systematic advantage. We construct a leading intelligent computing infrastructure. Model performance and computation efficiency continue to increase. Our core computing rate, our token cost, has reached an industry-leading level. Our average token throughput has increased by 10.1 x compared with that of 2024. Our bank-wide large model developers exceed 10,000 people, and we continue to introduce the cutting-edge model and implement domain-specific model as many as 183. Our average iteration cycle significantly shortened as well. We deeply implement this technology into our business ecosystem and implement over 800 applications and realize both tech and business value. We build our intelligent era organizations and teams, and construct talent pipeline that are cross-functional.
We promote deep integration of technology and business and build such an intelligent organizational ecosystem. We incorporate ESG philosophy into the bank's development strategy and decision-making and promote sustainable development. We promote the development of green finance and enhance our green operation capability. Green loan, green leasing balance grew by 21% and 23.89%. We assist enterprises to issue nearly 100 ESG bonds and raise their funds to support energy conservation, clean production, clean transportation, and other industries. We attach great importance to green investment. Our companies and subsidiaries are holding more and more balance of green loans, green bonds, and ESG products. We continue to strengthen our green operation and deepen the carbon emission reduction and enhance our own carbon management refinement level. We continue to enhance the quality and efficiency of serving the real economy.
Tech, green, inclusive, and manufacturing's loan balance have taking up more and more proportion. The MSCI ESG rating has received the highest level of AAA rating for two consecutive years. This is my brief overview of the 2025 result. Now I will give the floor to President Wang on the bank's operational information.
Thank you, Chairman Miao. Now I will introduce the bank's 2025 operational information. The year 2025 is an extraordinary year, facing multiple challenges. Under the leadership of the Board of director, we have withstood pressure, maintained determination, and promote the international, comprehensive, differentiated, and intelligent transformation, and maintain a good trend of operational results. Our business are moving towards new and better direction and building up our own strength and competitiveness, which were mainly reflected in the following five parts.
We continue to consolidate our customer base and our business development are both directing towards good volume and quality. We remain customer-centric and strengthen high-quality customer acquisition and strive to build ourselves into clients' principal bank and first bank to approach. Retail customers totaled 224 million, up by 6.67%, among which Golden Sunflower and above clients 5.93 million, up by 13.29%. Customers holding wealth products amount to 64 million, up by 10.15%. For corporate customer, it totaled 3.62 million, which was up by 14.4%, among which corporate customers newly acquired reached 657,000, serving tech clients as many as 350,000.
For corporate withholding customers, their amount was RMB 1.53 million. We also optimized category asset allocation. Total loans and advances accounts for 55% of the total asset. Retail loan accounts for 51% of the total loans and advances. Investment assets accounts for 31.77% of the total assets. Interbank assets accounts for around 7.36%, down by 0.02 percentage point. Bill discounting account for 4.43%, down by 1.09 percentage point. We continue to strengthen liability management and enhance the proportion of high quality liability. Total deposits accounts for 83.43% of the total liability, up by 0.12 percentage point. Core deposits daily average balance accounts for 87% of the total customer deposits.
Daily average balance up by 1.17 percentage points. Interbank deposit grew rapidly. Its demand deposit accounts for 93.77%. Customer deposit cost ratio 1.17%, down by 37 basis points. Interbank deposit cost ratio 1.02%, down by 29 basis points. Secondly, our four major segments are developing in a balanced and coordinated manner, and we are showing stronger development resilience. First, we secure the dominant position of Retail Finance and our leading advantage were further consolidated. Retail AUM balance exceeds RMB 17 trillion, up by 14.44%. Year round increment reached RMB 2.16 trillion, hitting a record high. Retail customer deposit total RMB 4.5 trillion, up by 11%. Retail demand deposits daily average balance accounts for 47% of the total.
Retail loan RMB 3.72 trillion, up by 2.07%. Market share growing steadily. We strive to overcome adverse factors such as weak demand and consumption. Our credit card business continue to grow in their market share. Active credit card users surpass 70 million, develop against a trend. The transaction value was RMB 4.08 trillion, down by 7.62%. Credit card loan amount to RMB 939.1 billion, down by 0.92%. The credit card transaction value and loan balance remain leading in the industry. Secondly, we speed up to build our characteristic in Corporate Finance and build up our strength in specialized segments. The FPA balance was RMB 6.73 trillion, up by 11.08%.
Corporate loan balance RMB 3.22 trillion, up by 12.29%. We focus on modern industrial system. We prioritize our loan granting in tech, green, inclusive manufacturings and other industries and increase our competitiveness. Corporate deposit balance RMB 5.34 trillion, up by 5.46%. Corporate deposits are accounting for 50% of the total. Retirement finance improve in both quality and efficiency. Annuity interest surpassed RMB 300 billion. Pension fund under custody RMB 1.55 trillion. Private pension accounts exceeded 15 million, and contribution was among the top in the industry. Transaction banking focus on the trade finance and treasury management needs of the corporate customers. The number of customers using Treasury Management Cloud further specialized. Third, Investment Banking and Global Market business further specialize and innovate.
FPA contributed by IB business grew by 10.38%. The bank as lead underwriter issued instruments amounting to RMB 579.16 billion. Number of clients in GM business of client flow trading and transaction volume both grew. RMB bond investment transaction value grew by 1.696 x. Bill discounting business grew by 12.89%, ranking second in the market. Fourth, Wealth Management and Asset Management continue to expand. We enhance asset allocation capability, grasp opportunities arising from the capital market and the Wealth Management business experienced robust growth. The number of asset allocation clients amounted to 11.76 million, up by 13.31%. Retail Wealth Management product balance grew by 12%.
Agency distribution of non-money market fund, trust scheme and insurance premium grew by 18.13%, 150.65% and 25.93%. Corporate Wealth Management product balance reached RMB 524.9 billion, up by 31.28%. Asset management business totaled RMB 4.71 trillion, up by 5.13%. Our custody scale ranks among the top in the industry, reaching RMB 26.09 trillion. Extensive Wealth Management income grew by 16.91%, top for the past three years, and accounting for 52% of the total fee and commission income, and increased by 5.78 percentage point. Fifth, we speed up the business development in key regions and enhanced the contribution brought by the branches in these areas.
We have 16 branches in key areas, and their customer base, AUM core deposits and other key indicators are having higher level of growth than the average level of other bank branches. Retail AUM's proportion increased by 0.79 percentage point, and corporate loan balance account, its proportion was up by 0.12 percentage point. Third, for international and comprehensive development, we actively build up our new strength. We actively serve Chinese enterprises going global and residents' needs of making global allocation of their assets, enhance our service capability. The overseas contributions are making more and more contribution. Their total asset grew by 12.88% and the net operating income grew by 33.78%. Institutions in Hong Kong grasp opportunities and make good performance. Their total assets grew by 13.84%.
Net operating income grew by 36%. Net profit grew by 63%, and CMB Wing Lung Bank's retail AUM grew by 22.14% for CMBI. The number of Hong Kong IPO underwritten and sponsored actually ranked number two and number four respectively. For cross-border business, it shows strong momentum. Number of corporate customer, in respect of international BOP, exceeded 100,000, and the volume of international BOP grew by 12%. We deepen our comprehensive development and subsidiaries delivered various performing highlights. Their total asset was 952.8 billion RMB, up by 11%. Their operating income accounted for 12.26% of the group's total, up by 1.96 percentage point. Net profit 16.38 billion RMB, up by 41%.
CMB Leasing focused on new energy, new infrastructure, new tech, new mobility and new intelligent manufacturing and new material, AKA the six new industry, to build their service mechanism. Their total asset was RMB 325.3 billion, up by 5%. CMB Wealth Management's product scale RMB 2.64 trillion, up by 6.88%, maintain the top in the industry, and the equity-related products actually increased in their market share. CMB Fund has managed a total scale of RMB 961.5 billion, up by 9.29%. Cigna & CMB insurance fund under fiduciary management RMB 223.3 billion, up by 23%. CMB Investment commenced operation, and we make new breakthrough in the layout of our comprehensive development.
Fourth, we upheld bottom line of risk and compliance, enhanced risk management capability, and have an even stronger solid foundation for development. We strictly classify assets and fully expose risks, actively resolve risk assets, and maintain a good management of credit, market, operational, liquidity and compliance risks and other type of risks. Our asset quality remains stable. Special mention loan ratio 1.43%, up by 0.14 percentage point. Overdue loan ratio 1.25%, down by 0.08 percentage point. NPL to loans overdue for 60 days ratio was 1.18. NPL formation ratio 1.03%, down by 0.02 percentage point.
As we are facing with the profound adjustment of the real estate market and rising individual risk, some mismatch in supply and demand in some industries, we stick to risk-oriented approach and dynamically adjust risk strategy and resolve risk in key indicators. Corporate NPL ratio 0.89%, down by 0.17 percentage point. Property NPL ratio 4.78%, down by 0.16 percentage point. Manufacturing NPL ratio 0.43%, down by 0.06 percentage point. Retail NPL ratio 1.06%, up by 0.1 percentage point. Residential mortgage NPL ratio 0.51%.
Retail SME NPL ratio 1.22%, and credit card loan NPL ratio 1.74%, and consumption loan NPL ratio 1.02%, all remain at a relatively low level in the industry. Fifth, we strengthen management and innovation to promote high quality development, and we have stronger momentum for future growth. First, on one hand, we consolidate our foundation and conduct refined management. We consolidate our management to strengthen asset liability, full cost, operations, service and team management, so as to guarantee our high quality development. On the other hand, we continue to promote our innovation capability and maintain a leading technological capability. We consolidate our technological foundation.
The overall availability of the cloud has surpassed 99.99%. We use hybrid deployment, elastic scaling, and other technologies to increase the input/output ratio of cloud. Big data service has covered over 76% of the business personnel. We have implemented a large model in four business scenarios and saving 15.56 million manual working hours and effectively enhance our efficiency. We upgrade retail Xiaozhao intelligence service and construct AI Xiaozhao service for the corporate clients. We speed up to build our AI organization. Over 98% of the personnel has already passed the preliminary level of competency certificates and adapt to the change of the technological risk condition in the AI era. The above mention is the major operational information of the year 2025. Now I'll give the floor to Chairman Miao on the 2026 outlook and operational strategy.
Now I will briefly introduce the company's outlook and strategy of 2026. Looking into 2026, for the banking industry, challenges and opportunities coexist. On the one hand, the external environment are exerting greater impact, and we see rising risk and in geopolitical condition. The world economy are sluggish. Multilateralism, free trade are under the severe threat. The new and growth driver continue to switch, and there are strong imbalance between supply and demand. The market expectation tend to be weak, and the bank are continue to faced with the three low: low interest rate, low interest spread, and low fee rate, and they're taking pressures in their profitability.
On the other hand, for Chinese economy, the supporting condition and the future condition has not changed, that the economy will continue to be developing in a good momentum. Along with more proactive fiscal policies and monetary policies, we seek to make domestic demand in the dominant position, build up strong domestic market, and we believe that there will be more favorable factors for the operation of commercial bank. In the year 2026, we will stick to our value creation bank strategy and continue to promote our three capabilities of Wealth Management, digital and intelligent technology, and risk, expand our moat, and explore a new layout of high quality development.
Firstly, we will maintain our strategic determination and follow the developing principle of the banking industry, focusing on high quality tech, self-reliance, strengthening the domestic market and high level of opening up and other key areas to seize opportunities and seize the customer need. Strengthen the capability of innovation and promote professional, differentiated, comprehensive financial service to clients and maximize our value that we can bring to customers, employees, shareholders, partners, and the society. Secondly, we will focus and sail through the cycle and maintain our competitive edge. In the low interest rate cycle, we will make sure that we will pay more attention to stabilizing the NIM and maintain an industry-leading level. Secondly, we will build up our strength and make up for what we are not good at and strengthen our asset allocation capability, maintain our strength in Wealth Management business.
Third, we pay special attention to the pricing and risk management of credit assets and maintain good asset quality. Fourth, we will promote the reasonable growth of RWA, optimize the capital allocation, and maintain high level of CAR. Thirdly, we will seize opportunity to speed up the transformation of the four initiative and build up the new strength, speed up international development, and promote overseas institutions to achieve high quality development, build up our cross-border business, and help enterprises going global, promote the comprehensive development of our subsidiaries and increase their contribution to the bank. Build up our differentiated competitive edge, consolidate our systematic advantages in Retail Finance, and speed up to form a new growth pole in key areas.
We will also speed up our digital and intelligent transformation, stick to AI first philosophy and build up an intelligent bank, realize the model upgrade, and construct our new moat in the new era of AI. Fourth, we will build up our resilience to promote the balance and coordinated development of the four business segments. We'll consolidate the dominant position of Retail Finance, build up our strengths in Corporate Finance, and promote a stronger and better IB and Global Markets business, and speed up the development of Wealth Management and Asset Management business to promote these four segments to promote each other and support each other in a higher level and construct a more resilient and competitive business development layout. Fifthly, we will guard our bottom line to consolidate a fortress-style risk and compliance management system.
We will stick to a prudent and steady risk culture, enhance our capability to understand the market, prevent credit risk, market risk, operational risk, liquidity risk, and other risks, and strengthen AML and internal control management to make sure that CMB could remain steady and resilient in the path of high quality development. Thank you.
Thank you, Chairman and President. Now we will enter into the Q&A session. We will have the questions from the investors and analysts first, and then from the media. As we have many participants today, please follow the instruction given by the operator to raise your question, and please limit your question to one only. Please raise your name and the agency you represent before having the question. Now we'll have the first question. Please press the More button if you're joining from the mobile end. Please press the Participant button if you're joining from the PC end. Please open your microphone and camera when you raise the question. Please also introduce your name and the agency you represent. The first question, please, from this gentleman.
Thank you for giving me this opportunity. I'm Richard Xu from Morgan Stanley. Congratulations first for the brilliant results that you have achieved in 2025, and also you have achieved very good results in retail even within this very turbulent external environment. My question is for the Chairman first. This year is the start year of the 15th Five-Year Plan, what is the plan or strategic vision or expectation from the Board to China Merchants Bank? Nowadays we have seen very fierce competition among the banking sector. Against this backdrop, how can the Board ensure the market-oriented mechanism of China Merchants Bank so as to expand its advantage, competitive advantage? Thank you.
Currently, I think the banking sector is still in a downward cycle, so banks are facing very daunting challenge. During the 15th Five-Year Plan, our requirement from the Board to China Merchants Bank is to stick to the high quality development and accelerate innovation. It means that high quality development and stay to the true course. It means to be professional, to be market-oriented road. This is the key to the high quality development. Also at the same time need to have innovation so as to consolidate our strength, and also to be differentiated from the peers, and also to accelerate the transformation so as to respond to the challenges which has been brought out by the downward cycle of the market. What we have seen is to be internationalized and to be more comprehensive operation and also digitalization, intelligent banking, and also to be differentiated from the peers.
These are four very key elements of the banks. In terms of internationalization, we have achieved quite obvious results in the past two years. In terms of the comprehensive operating management, the subsidiaries of the banks are contributing more to the bank's operating income. This is a very good advantage of CMB as well. Differentiated positioning, it's also CMB's advantage. From the Board, the business model for CMB will be advanced business model and also innovation driven, and also to have the distinctive feature and also to be the first class bank which can create value. This is very important, also the mode for CMB. Finally, there will be the digitalization intelligent bank. In the past, we have been advanced and also better than peers in terms of technology.
Now we want to build up the first digitalization bank among the industry, and later on we'll have our Chief Information Officer who can supplement more. Market-oriented mechanism is the backbone of CMB, and I think that the reforms of the remuneration system will not affect CMB's market-oriented system. For CMB, the gene of international is the corporate culture of CMB. This is the mode of CMB. In the past, some of our analysts and also customers are expecting or thinking that CMB has different modes, such as the low-cost income, low-cost funding source. Some say that it's retail.
I think the very basic one of our mode is the customer-centric culture, and this has been our corporate culture and is the key, our foundation of our business. Because we are customer-centered and customer have good experience with the bank, that is why they want to bank with CMB and also deposit with CMB. They deposit with CMB doesn't mean that they only want to put some money in CMB, but they want to do the financial trading and financial Asset Management with CMB. That is why we have the lowest funding cost. Among the banks, we have the highest demand deposit ratio among the banking peers. The board's requirement is to deepen reformation and accelerate internationalization and also differentiation, to be intelligent and to be comprehensive operation. This is very important for CMB. I would like to invite Mr. Zhou to supplement more for the intelligent banking.
For the past years, we one of the very key issue strategy for CMB is to have a technology leading bank. From last year, we also have made a plan for the next five years' technology development. We have fully arrangement plan for the next five years. I think in the next five years, the key is to be technology leading is one of our key strategy. We all know that AI has been a very important trend. From at the end of 2022, the Chairman has a requirement for CMB is to build ourself into one of the the first intelligent bank among the industry.
We have made quite a lot of efforts on that front. Now, in terms of the large model, we have made quite good achievement in 2024. We have more explorations and have experience, has gathered experiences. Mr. Wang Liang put out the idea of the AI-first strategy, saying that among the whole bank to expand the application and also the mindset of the AI-first strategy. Firstly, we have upgraded our organization and team, which are more applicable to the AI era. Especially large model is a very big breakthrough in the technology history. It cannot substitute fully the human intelligence. To some extent, it can be replaced.
We have a kind of analysis about what people are more good at and what AI models are better at, and how AI can assist or to be separately work together with our human staff. We have analyzed around 1,580 projects, and to analyze how AI can assist and how AI can help with the work. We have quantitative data on that, and some are, say, high value projects, and some are for mid value, and some are low value. For those high value projects which AI can assist more, then we will have more resources to put on. 69% of them have been already implemented.
Altogether, there will be 856 projects that have been implemented, or we can call it a scenario that have already been applied among the whole bank. Just now we have in the results announcement brief, the Chairman said we have already implemented AI, this AI application in 856 scenarios. Now we are accelerating the pace to analyze and improve the important business procedures. Secondly, I think the AI development is very have a very big difference to the traditional software engineer software. It means that there will be high uncertainties when we are upgrading AI model. For CMB's experience that we think there are 6 x of upgrading before we can really put the AI, the large model into practice, into real work or into real practice.
Last year we have made quite good results in the application of the large model. The upgrading period has been shortened to around eight days of the business model. Which means that it's faster for us to apply this large model. For 2025, we have achieved quite results in 2024, which shows that for the large model application in CMB, the depth and the width of the application of AI has been expanded in a very fast manner. I also would like to share with you one important data in this regard. In 2024, the daily throughput of the token is around 10.1 x of what we have in 2024. It's a very fast speed. The daily average token throughput is 25.6 billion.
In important areas, the application of the large model has already been exerting effect, is serving around 10,000 Sunflower customers. We have over 10,000 assistants for our Sunflower relationship manager, and also for our corporate manager, help them to improve the customer reach out ratio by around 14%. Also for corporate credit loan business, the AI model is helping them before loan granting and during the loan lending and also after that, especially for microloans. Around 82% of the microloan loan submission and credit approval is done by AI and large model. They also accelerated the approval process of the microloans, which is 44% faster than what we have last year.
In the past, for how we can implement the credit approval conclusion in the past that has been done by human beings, by the human staff, but now it's assisted by the AI large model, and the system will kind of follow how the credit approval conclusion has been really implemented, and also it has speed up of our early warning system that is also better than our human staff. I think the early warning is 42 days faster than what we have in the past. Which you can see that it's both helping us in all fronts, improving business development quality, and also improving efficiency.
In terms of improving efficiency, for the whole year, it has saved around 15.56 million working hour, it has saved that. This is an efficiency improvement of the efficiency. We all know that AI is improving or is kind of upgrading in a very fast manner, but there is hallucination, there is a fault that the models are doing. Banks are an area that is highly regulated and need very prudent risk management.
We are fully kind of alert to the hallucination of the AI, and controlling risk is a very important aspect of AI. Very importantly we need to be very prudent in developing AI models which can be reliable, and also we have achieved quite results in 2025. In 2026, I think we will move on and doing more efforts in this regard, better to implement our digitalization and intelligent banking strategy. Thank you.
The second question please.
Thank you. Thank you for giving me this opportunity. I'm Mei from UBS. First of all, congratulations on the very good results in 2025, especially against this very complex environment. Last year, our operating income and profit both have recorded positive growth. It's very good. My question is, if we look into 2026 or even forward, how we can expect the growth rate of the operating income and the profit growth, such as to be accelerated to around 3%-5%?
Another question is about our ROE. I know CMB's ROE has been higher than other banks last year. It's around 13.44%. The average banking level is around 9%-10%. In the past years for the ROE side, we are seeing the ROE has been declining for CMB as well. If we look ahead for the next two or three years, how will you expect the ROE's bottom? Will the bottom be around 10%-11%? My question is for Mr. Wang Liang.
Thank you for your confirmation of our 2024 results. Before going into your question, I think this year is the 20th year when we first IPO'd in H-share. We have financed around RMB 31.3 billion in our H-share market, raised first fund. Our total dividend payout is around 2.6 x of the funds financing that we have got in the H-share market. The total CAR ratio of the share pricing is around 15.07%.
I think that even though there is volatilities of our share price, especially during the financial crisis, but I think for long-term investors, I think you can make quite a good return from CMB. We also continue to be very firm in creating value for our customer and also to have the return for the investors. Thank you for the long-term trust and long-term investment for our shareholders in CMB. That is why we can see our H-shares P/B is higher than our A- shares P/B.
Thank you very much for the overseas investors, especially for our H-share investors. Just now your question was about how we expect the operating and profit growth of our in 2026. I think that for the past years for operating income, we have been facing very big pressure over the past years. This year is 0.01% growth rate. It's kind of the first time that we have recorded a positive income from 2023 and 2024. Finally, it's a positive growth even though it's a very small growth, but it's a very hard-earned one. The small growth can also illustrate or demonstrate that we have been very resilient in our business growth.
This year, why we are facing such a big challenge or pressure, I think one of that is that our traditional advantage lies in retail, but retail business has been affected, highly affected by the policy side and also highly affected by the external environment. We try to make up the shortfall from the retail sector by moving up or have more growth on the other business sectors. This year we have a slight positive growth this year. Whether we can continue to have the 3% or 5% growth in the next years. I think from the business indicators, we will be very proactive and to make efforts to achieve growth and also such as for the customer base growth, and also asset and liability growth, as well as especially AUM growth.
These are the preconditions for how we can make growth on the financial data. In terms of the financial data for this year, our expectation is that within the stable we will have stable growth and also we want to make improvement. We will try to make improvement in the stable growth. Whether we can achieve that goal is hard to tell, but we will make efforts to on that. Such as in the NIM sector. Last year stood at 1.87%, 11 basis points year-on-year decline. This year, I think that the year-on-year decline of the NIM will stably decline, but the magnitude of the decline will be smaller last year. Last year was a year-on-year decline of 11 basis points. This year, the decline will be smaller than that.
The main reason is that from the policy side, I think that we are expecting more rate cuts and also the RRR cut this year. If there will be more rate cut, it means that it will affect our asset yield as well. The second reason is that when we are looking on the credit side, we are seeing that quite weak credit demand. There's very fierce challenge or competition for the credit. So people are trying to grow more volume. Banks are trying to grow more volume to make up the shortfall from the declined interest rate. That is why we cannot see the end to a rebound of the interest rate, so this will also pose challenge to our NIM, to our interest income. The other factor is on the liability side.
On the liability side, last year, the funding cost has been down by 38 basis points, and last year funding cost is already one of the lowest among banks. Among the peers, the room for us to further decline will be smaller, and that is why we are still facing pressure on the NIM side. In terms of non-interest income, last year we have seen fast growth on the Wealth Management fee income, so make up the shortfall from other non-interest income. This year we'll continue to see other fee rate cut policies on such as on mutual fund. So this will also affect our fee income from the agency sales of mutual funds and challenge. That is also a challenge on the fee-based income. The third uncertainty comes from risk sector.
The corporate sector is under control and also stably declining, but still we are facing mounting pressure on the retail side, especially for micro loan, consumption loan. We try to control the risk so as to reduce the credit cost and to maintain a stable profit growth. These are the negative factors that we are facing, and why I say that the growth on the operating income and also profit side, we are still under pressure. Last year we are trending into a better direction. It's more kind of contributed by our active, what we have actively tackled the challenges, how we have responding to that. We have quite a good results last year, which is say, you are seeing it stably turning to a better trend. As for the question about your, you also asked about the ROE.
These years we have slower profit growth and but the growth rate for our equity and after the dividend payout, we still have quite a big volume of the equity which supplemented to the existing one. That is why equity growth rate is faster than the profit growth rate, which lead to a decline on our ROE side. ROE this year is 13.44%. From the Board and also from the senior management, we highly emphasize the level of the ROE. As long as we have high ROE, we can have a relatively stable return to our shareholder. We are strengthening the management on our ROE to improve the return on our capital. My judgment is that still we are facing the pressure on ROE decline or the trend will continue.
Whether it will bottom out at around 10% or 11%, I think we will control the speed of our ROE. I think 10% will be depending on the future's external circumstances and also interest rate. I think that 10% will be a bottom for us to have a better control of our ROE. Because I think a bank, if can maintain a ROE of 10%, it means a good return for the shareholder. But we also compare that our bank's ROE and also the advanced banks in the world, we think that CMB is still in a leading position. I think that we will try hard to maintain a sustainable ROE.
For 2026 and for the next few years, I would like to conclude what we have Mr. Wang has just said is the first one is that the cycle is the same, namely the CMB's business cycle is the same, in line with the sector's cycle, but our marginal performance of CMB is better than peers, no matter in a downward cycle or upward cycle. I think we are trending toward a better trend. Thirdly, we still have our existing advantage during this cycle, even though our business cycle is i n the same trend with the sector's trend, but marginally, we can see we are improving, and also we have very obvious advantage. This is a conclusion of our performance. This is my conclusion for CMB's performance in 2026 and continue forward.
We'll have another question from the onsite participant.
Thank you, senior management. I am Gary from HSBC. I have a question about NIM outlook. We noticed that in the fourth quarter, your NIM was experiencing quarter-on-quarter growth, which is for the first time for the past three years. I would like to learn from the senior management, do you expect the trend to continue in 2026? When do you expect the turning point of NIM to appear? How do we understand that? Thank you.
Thank you for your question. Just now, President Wang has mentioned a bit about the judgment about NIM. I fully commit that the direction is correct. In 2025, our NIM was 1.87%, down by 11 basis points. To see from quarter-on-quarter change, quarter one, 1.91%. Quarter two, 1.86%. Quarter three, 1.83%. And quarter four, 1.83%. There are some characteristics of our NIM. The declining trend continue, but the magnitude actually shortened. In 2025, the reduction was 70 basis points. In the annual operation of our NIM, we see some rebounds in the fourth quarter. There are three basis points up on quarter-on-quarter change. For the group-wise, that was 2 basis points.
You can also see from our external changes in the interest rate environment. There are some contributions given by these factors about our NIM. There is a quarter-on-quarter increase bank-wide in terms of the NIM in the fourth quarter. In asset and liability management of the bank, we have made great achievement in pricing. We have been quite following the self-managing mechanism, and we have strictly follow the principle to give the loan pricing. Generally, we have improving the loan pricing condition. The second perspective is that we have made a achievement in improving our structure. We have increased the proportion of assets that are earning higher asset yields.
Even though in the demand side, we are experiencing some pressure, but we strive our best to promote the growth in asset, and it has also contribute to the final result. In the fourth quarter, for instance, for some low-earning assets, for instance like bills, we have been reducing its proportion. All in all, that factors contribute to the rebounds of our NIM in the fourth quarter. You just asked about us whether this trend will continue in the year 2026. Generally, I think our judgment of the development of 2026, we believe that NIM will still decline, but we are having this wish, and we are having this judgment that the magnitude of decline will be smaller. I think this is a trend for the past several years as well.
You may expect to see the first quarter data that also was the beginning of the year, but when it comes to our judgment, and generally speaking, the NIM will be somewhat lower than that of the quarter four indicator. The main influencing factors are still those external factors, such as weak demand in assets, and it further leads to the decline in the loan pricing. There are also some technical reasons behind. Last May, there are some LPR cut, and we have some floating pricing loans that will be repriced in the first quarter. That accounts for around 78%. There are around 78% of the loans that are to be repriced in the first quarter. In the first quarter, it will be a concentrated period of time when we see the most amount of loans to experience repricing.
The other part is that deposits. The deposit repricing has not yet completed for the past year, but just now, President Wang also mentioned that deposit repricing for CMB. We should not neglect that CMB has quite a high proportion of demand deposit. We have not that much room to further decline in our deposit cost. That in the liability side, the cost reduction will contribute less, comparatively speaking. In 2026, NIM will continue to decline, but the magnitude of decline will be better than that of the past year. We will take further measures of liability and Asset Management. We have made a very accurate and very comprehensive management. We have been asked by our board to maintain a leading level in the NIM, and we aim to achieve these goals in the year 2026.
The first is to realize the magnitude of decline of NIM to be smaller than that of the past year. The second is to achieve the stability of NIM as soon as possible. We wish that we could achieve this goal in the second half of the year. Third, we can maintain a leading level in the industry about our NIM. Thank you.
Thank you, President Peng. Let's just wait a second, and we have also got some question from online and, I think the next question will be given to an online participant from Guotai Haitong Securities, Zhu Chengxi.
Thank you, senior management, for giving me this opportunity. I have a question for President Wang. You have just mentioned that CMB has been listed for over 20 years, and you have take us go through the history. For the past 20 years, such a long period of time, CMB is actually begin to think about its development model ever since the financial crisis in 2006. I think by that time, you actually deliberately choose retail and Wealth Management as your development priority. As we take a look back, this choice has made CMB a leading position ahead of our peers around one decade.
We have deeply pondered our choice to deeply develop Retail Finance, and we have experienced the glory brought by the retail strategy in the year 2017- 2021, which was also shown in our evaluation in the capital market. We have also experienced some pressure due to the change in external environment. Standing at this time point and looking into the future, we are now in a new phase of economic development. How do you consider, how does CMB consider a new competitive edge for yours in the future?
Thank you for your question. As you say, CMB has been adopting the retail strategy since the year 2004. We have forged our systematic strengths, and this strategy has bring us a lot of contribution in our overall development, and Retail Finance has made over half of the contribution for us in terms of net operating income, in terms of profit, and etc. Of course, we have overcome some difficulties and experienced some pressure. The retail credit and the credit card business, they are all under external environments pressure and Wealth Management business.
The agency distribution of fund management and about insurance policies, we are also experiencing challenges brought by the fee reduction. This year for CMB, how to adjust ourself, how to adapt to this new environment and maintain sustainable development, we need to have some new mindset. On one hand, we have been developing a coordinated and balanced development of the four major segments.
The four major segments are retail, corporate, Investment Banking and Global Markets, and also Wealth Management and Asset Management. By consolidating the systematic advantages brought by Retail Finance, we will consolidate its contribution to CMB and speed up to build up our strength in Corporate Finance. Corporate F inance, especially for Cross-border Finance, Manufacturing Finance, tech finance, and etc, they have all made good achievements. For IB and Global Markets business, they are becoming our new growth pole. Asset management and Wealth Management business, they are all showing good growth momentum. These four major segments, they are coordinated and balanced and supporting each other. For the second aspect, we will speed up our full initiative development, especially for the international development. For CMB, we propose to develop cross-border business, overseas business, FX business.
These three business will be the pillar of our cross-border finance development, our international development. In comprehensive development, we will give full play of our full licensed characteristic and enlarge our subsidiaries' development, and to make sure that these subsidiaries are the top players in their areas. We have also made good results in these fields. Fourth, we are also sticking to our differentiated regional development philosophy. Beijing, Shanghai, and Shenzhen used to be the three core cities that makes the most contribution to us. We will be driven by these three core cities and to transform into the three major regions, Yangtze River Delta, the Greater Bay, and the Bohai Rim. The three key regions will serve to be the new three core regions of our business development so as to make us more sustainable in development.
We can make sure that by developing these three regions, the business in these three regions, we can maintain a good momentum in the future development. I think by leveraging on these several aspects, we can transform from the previous retail-driven strategy to a multi-segment balanced and coordinated development of our new development model, so that they can support each other, promote each other. For the past two years, all our domestic and overseas branches, our subsidiary branches have all realized profit-making, and our business tend to be more balanced, more sustainable, and we are working towards an era with multiple contribution given by different sources of revenue. To answer your question, I think these are the measures that we have been taken and what the positive results that we have achieved.
We have a question from on-site participant.
Thank you, senior management. I am Yang Shuo from Goldman Sachs. I noticed that you have been experiencing quite fast in Retail Finance. I noticed some risk in the Retail Finance, retail loan business. For the second half of 2024, you have quite a fast growth rate of the non-mortgage loan. I would like to understand the risk about this part of loans, and could you further elaborate? Could you also provide more details about the provision in these part of loans?
Thank you for your question. Just now, President Wang have mentioned that the retail credit risk asset quality. Since 2019, after the pandemic happened, credit card risk begin to rise. Till the year 2022, we observed that the corporate property loan risk begin to expose, and then it continues to rise in terms of its risk. Excluding the credit card loan, the rest of the retail loan, for instance, the mortgage, the consumption, the microloan, ever since the year 2024, we also see their risk begin to rise.
Until now, the rising pace of their risk tend to be slower. For some specific number, I think I will leave it behind, but for special mention NPL and overdue loan, their balance and the ratio both increase in terms of microloan. For consumption loan, its NPL ratio, it decreased a bit compared with the end of last year. Special mention loan ratio rise a little bit.
Well, in terms of the future outlook, in the short run, the property market is still under a deep adjustment so that the residents' income, whether it or not it could be improved for consumption, for microfinance loan, they are still under pressure. Well, along with the path that the government are playing a bigger role in terms of their proactive fiscal policy and monetary policy, and with the external environment tend to be trending towards a good direction. Ever since this year, microfinance loan and consumption loans, NPL balance increment are now tend to be slower marginally. In the low interest rate environment, some profit-making product, they're actually experiencing some slowdown in the profit-making level, in their risk-bearing level. In the following pace, we will further optimize our structure and stick to a collateral-based business, especially for consumption loan.
Consumption loan, we will strictly guard our bottom line of onboarding these clients and further optimize our customer structure, which we will have early warning, early risk exposure and take proactive measure to lower the risk of arising from a retail credit and to guarantee that the retail asset tend to be good, maintain good in its asset quality. For allowance and provision, for the past year, the allowance coverage ratio was down by 20 percentage pointss compared with that of last year. The main reason is the NPL balance increased. The NPL balance increased by RMB 2.5 billion, a growth rate of 4%.
The provision balance tend to be lower, so the numerator decrease and the denominator increase so that the allowance coverage ratio decrease. For personal credit, but for personal loan, in classification, we tend to follow our strict manner. In the overdue days, entering into the doubtful level, into the substandard level, we still keep our very strict classification management. In provision, we are making the provision one case by one case. The main reason is that, the overall balance of the personal loan continue to increase and the allowance, the provision tend to decrease. That is the major reason. Looking into the future, the major reason is that the NPL balance need to decrease so that our allowance coverage ratio could be better. Actually, this indicator is quite sensitive to its numerator.
If CMB, under this external environment, if we can control our balance of retail NPL, we could maintain a good condition of this allowance coverage ratio. We are still under challenges in the year 2026. Retail credit risks are a market problem, an industry challenge that every banking peers are facing. The retail assets are under pressure so that, it's not just CMB are facing this question. By responding to this challenges, we will maintain and take proactive measures to guarantee the retail asset quality to be stable. We will conduct very strict asset classification and make very adequate and accurate provision. Our allowance coverage ratio is now 391%, which is 20 percentage points lower than that of the previous year, but the absolute level of this indicator is still higher than that of our peers.
We will maintain a very steady and prudent provision strategy and make sure that we have abundant coverage of our NPL to guarantee that we are having a good provision level compared with our peers.
Next question, please.
Thank you. I'm from CICC, Zhang Shuaishuai. My question is about the intelligent. A follow-up question just now, I think the Chairman and also President, also Mr. Zhou has already have very specific answers on that. I see that we have more disclosures on the intelligent part. My question is, from the financial data, how we can evaluate the effect from the application of the investment into AI, because you have put a lot of resources in AI. Another question is that, you want to build up into the first intelligent bank, so how we can evaluate that? How we can compare you with other, Chinese banks? Now, CMB want to do more AI, want to be, best among the bank industry. How we can evaluate the advantage of CMB in this spectrum?
As for the large model from its birth to now, it's three years. It's not a long period. The application of this technology and every day we can see news from the media that it's improving. I think the real impact of the technology on the society is still in the process currently. The industry which have been deeply reformed by the AI technology don't have much. We don't have much industries on that. Overall, we can say there is not many industry that have been deeply reformed by the AI technology, and banking sector is quite a different sector. The regulators' attitude towards the application of AI in banks, not only the Chinese regulator, but the overseas regulators such as Singapore regulators, they are quite prudent on that front.
Especially such as the Monetary Authority of Singapore, they have also made very strict regulations on the application of AI. For the Chinese regulator, the requirement is that the application of the AI technology should be taken into account by the human staff. It means that the application of the AI among the banks should be human staff plus AI application, which is a requirement from the regulator as well. From CMB's, we think that in the breadth and depth of the application of AI, we are faster than peers. Currently, for 45 kinds of the areas, we have analyzed what human staff are doing.
For this projects that human staffs are doing, it's around 3,400 are done by human staff, but around 1,500 could be assisted by AI. It's a dynamic process that we are kind of analyzing and also improving. From the very micro perspective, we see that AI is taking effect in many areas, but I know that the question you have raised is also something that I'm thinking about. What changes or big changes that the AI application has been done to CMB? I think there are some changes, but still in the process. There are changes in the micro size, such as for the Sunflower customer. The customer reaching out ratio has been improved by 14% for our relationship manager. It's taking effect.
Per customer transaction volume has been increased by 20%, so it's also quite a good number. Overall, I think it's taking effect. We think that the technology is still improving and moving forward. There's great potential on that. We are firm in this AI first strategy. This is to your first question. Second question is, well, how can we say that? How can we evaluate intelligent bank? This is something we are doing. I think that we are studying what are the indicators that can evaluate what, how we can evaluate a digital intelligent bank. The first intelligent bank.
In terms of, I think that from these aspects, such as for the application of the large model, like the research technology and research capability, in terms of the application we can. We are ahead of the peers. We need to improve the efficiency of the usage of chips. In China, we are more use the domestic chips and how we can better improve the efficiency and how we can improve the computing efficiency. We're still improving, but it's not very mature yet. We rely on the entity that is using the chips. We are very strong in terms of cloud, and we have around a team of 300 people who are engaging in the cloud technology. We also have a reasoning platform as well. For the computing, around 35% are done by ourself.
It's quite the level of the top internet companies. It's like 99% utilization to make use of a cluster of chips and responding very fast and do not have much delay. There are many difficulties in technology, but we have done quite well. The breadth of the application, we have already applied large model to 859 scenarios, and more of them are concentrated in the high value scenarios. We have a very big breadth on that. For CMB, we have a special area. Even compared with the advanced banks in the world, we have a very good fusion of technology and business. Technology could be better applied to business. CMB has done quite well in the fusion integration of business and technology. There are some concerns that maybe AI can substitute human being.
I think the people who will be phased out in the future are the ones who cannot use AI. We are encouraging our staff to use AI. That is why we can see a very fast speed of the usage of token. Our staff in our bank have been very open-minded, and they try to use the new technology. We are ahead of the peers in this regard. What can we say about what is an intelligent bank? I think it's we are still studying how we can evaluate that. Just now I mentioned about the hallucination, and these are also challenges where you kind of put more investment on that.
What we are trying to do is to reduce the hallucination and to build a more reliable agent. For CMB, within there are some top companies like OpenAI and Anthropic. They are not open sourcing, and they do not say anything about that. So how we can limit the hallucination of AI application, and there's less talk on that. It means that we need to input by ourself, and we have made quite good progress on that, especially in the past six months. We have made quite a good target on that. Thank you.
From the investment input and output perspective, because if you want to build an intelligent bank, there will be much impact for CMB. Our investment into enlargement is to optimize the resources allocation. It's not the same as other companies. Other banks may have not invested in this regard and need to increase a lot of CapEx in this regard. For CMB, we have been continuously increased resources into that. We are optimizing resources. It doesn't mean to increase much capital investment into that. It doesn't have much impact on the cost side. From the banks' IT investment, we can see that in terms of business perspective, we have already built up our advantage.
Next phase, we are building our advantage and our model in a technology area so that CMB can have a long-term and sustainable competitive edge. I have one more point for that. I think a good question is better than a good answer. This is the same question that I asked Mr. Zhou. Today, I think that he has answered my question before, but it's not a very good point and doesn't satisfy me. Today, I think he made quite a good point today.
Now, Ms. Xiao Feifei?
Thank you for giving me this opportunity. Just now, for the retail, my question is about the retail business for these years, both for asset size and also for asset quality, and CMB is regarded as the best retail bank among the industry. How you can continue to grow your retail business and also consider the change of the environment to upgrade your retail business. Could you please explain from the perspective of the retail credit and also for the retail credit business, how you can. What is your short-term, mid, and long-term change, and also how you can arrange that?
Thank you for your question. As you mentioned that, just now, I mentioned that CMB's retail business is facing quite big challenge, and we have tried to be more comprehensive operating so as to make up the shortfall. Even though we are growing our other business, we didn't forget the retail. Retail continued to be our strength and can be our advantage. Everyone in the CMB talks about retail and knows about retail and does retail business. This is a culture has been embedded into CMB, embedded in the mind of the everyone of CMB. We will continue to expand our advantage on the retail front. For these years, the retail contribution to our income has been quite stable. It's not growing very fast like in the past.
The business actually have changed in terms of structure, such as you can see the customer base like that we have a very big retail base, 224 million, especially the high-end customer growing faster. Secondly, our AUM is growing very fast, last year reaching around RMB 17 trillion and up by RMB 2.6 trillion. The growth rate is a high ratio. In the past years, annual increment is around over RMB 1 trillion, but last year it's over RMB 2 trillion. Thirdly, even though we have seen a quite a big decline in a growth rate of our retail credit growth, last year we continue to see more market share in the market share in terms of the retail credit.
This shows that the strength of our CMB's retail business is actually expanding. In order to consolidate our strength of our retail business, we continue to expand the customer base. Secondly, to improve the product system. Thirdly, to upgrade the service system. Like, we are combining online and offline service channels so as to improve the customer's experience with us. Fourthly, to build up our ecosystem, such as we work with the mutual funds and also trust companies as well as Asset Management companies to build up our friendship with other ecosystem. We have more better products that we can provide to our customer and create value for the customer.
Fourthly, very important is to prevent risk, to improve our systemic kind of strength in the retail side so that we can see the contribution from retail side is still around 50% to our operating income and also profit. Just now you also mentioned about the retail credit and also the Wealth Management business. For retail credit, we have the credit card, we have a mortgage, we have consumption loan and a micro loan, the four major products. Last year we have negative growth on credit card, but our strategy is that we maintain a stable and low volatility trend to prevent the risk. We think that some of the decline in our revenue or the business growth in order to maintain a stable asset quality.
Last year, the credit cards NPL ratio is around 1.74%. It has been stable for the past years and be better than the peers. In terms of mortgage, we continue to grow the secondary housing facing the decline in the demand side, and that is why we have slight growth on the mortgage side. The growth rate cannot be compared with the fast growth rate in the past. For micro loan, we are doing inclusive financing and inclusive financing and also micro loan, 80% of them have collateral where the property is a collateral. The overall risk is under control. Consumption loan, we think that we're centered on the retail customer that who have already a salary payout and also AUM.
This kind of short-term demand for us, so the asset quality is also stable. For our total retail credit totaling around RMB 3.6 trillion and around 50% of our total asset, it continues to be an important area that we allocate our credit resources for. We will continue to take advantage of the advantage of retail credit. There is more small ticket size and also the risk is more diversified. These are the advantages of the retail credit business. In terms of Wealth Management business, I think that we will seize the opportunity brought by the capital market, especially people's demand to allocate more of their assets to the financial products. For product side, we need to be more advanced.
We have mutual private fund and also for precious metal and also overseas investment and asset and also Wealth Management products. We have different product lines and also we need to upgrade our product system to better satisfy our customers' needs. Secondly, very important is how we can improve the service. How we service our customer online together with the offline is combining them together, very important. These years, we are more allocating our offline relationship manager service the high-end customer, and this is a better resource allocation of the relationship manager. In terms of Wealth Management, we will continue to maintain our fast growth strength. The total income of the Wealth Management can also continue to grow.
I have a goal for CMB, namely for a restart of the retail business and also faster growth of the corporate business. For retail, it means that Wealth Management should be strong and also continue to build, maintain the. One is to improve the asset quality, and secondly is to maintain the solid advantage of the funding source and also to strengthen our advantage in Wealth Management.
We'll have a next question from an on-site participant.
I am Yu Lihan from JP Morgan. Thank you for giving me this opportunity. I have a question regarding the capital. We have noted that in 2025, CMB's RWA growth rate was 10%, which was faster than the 8% asset growth rate. I would like to understand the underlying reason behind. Is it a one-off reason or is a normalized influencing factor that will continue? Looking ahead, how do we look at the RWA growth rate, asset and loan growth rate for the future 1-2 years? And what is the trend of the CAR? Will it continue to face downward pressure? What's the influence to return of the shareholder and also the cash dividend payout?
Thank you for your question. I will answer first on RWA. Every year when we are discussing about RWA, we have been emphasizing that we aim to lower the volatility and maintain stability. For many years, the level of our RWA was around 9%-8%, and it's overall stable, but we will adjust it a little bit according to the external environment. It's more or less around 9%. Just now, you mentioned that in the year 2025, the RWA growth rate 8.8% under the weighted approach, 9.5% under the advanced approach.
Generally, it's following our philosophy, but compared with our asset growth, you might think that it would be a little bit higher, so I would like to explain more a little bit. I think the influencing factors are, in the year 2024, the shift from the new capital regulation is actually conserving some capital for us. That will be having a low base effect comparing the year 2024 and 2025.
The second reason is that when the credit loans are under pressure, the corporate loans are taking higher proportion, and these type of loans are having higher risk weights. To some extent, it will enhance the RWA. The three influencing factor is that, as we have quite strong capital strength, we could use it to support some off-sheet business. For instance, the bill discounting business and etc. The fourth reason is that in bond investment, we have enhanced our bond investment and enhanced the market risk assets. These four reasons above mentioned generally contribute to our higher growth rate of RWA. I once again want to emphasize our philosophy.
We would like to lower the volatility of our asset allocation, and I think it's also a capability to help us to sell through the cycle. We will maintain our mid-level of RWA growth to 9%-10%, and there will be some slight changes according to the external environment. We have also noticed that our CAR experienced some slight decrease, but the reason is mostly about some one-off reason. For instance, we had one interim dividend payout in the year 2025. Last year, due to the market volatility, we have experienced some volatile influence in our OCI account. This is also another factor influencing our capital strength. Excluding this factor, our CAR continued to be stable.
When our CAR tend to be more and more abundant, and when we are facing more and more pressure from the capital, it's quite difficult for us to see a continuous increase in the CAR. Even though I still wish that we can leverage our own efforts to achieve a balance in business development, capital growth, and etc. I think that, for the dividend payout question, I have also just answered that we tend to be stable. I think it's a triangle balance that we aim to achieve. That is business development, dividend payout, and capital strength.
We will have another question.
Thank you, senior management. I am Chi Shaliang from CSC. I have a asset quality question. We noticed that in the fourth quarter, CMB's NPL formation has been increased. I would like to understand the reason behind. Is it because of the micro or consumption loan you mentioned before? Is it about some quarterly reasons? We also noticed that, President Xu, you have mentioned about a decrease of the allowance coverage ratio and our principle to manage this indicator. I would like to understand that how do we balance the profit growth and, allowance coverage ratio, how to achieve the balance between them two?
For the fourth quarter, our NPL formation was RMB 21.1 billion. There are some slight increase compared with the third quarter, an increment of RMB 5.9 billion, mostly from corporate loan, that is, RMB 4.6 billion yuan. Corporate loan NPL formation saw as an increment of RMB 4.3 billion compared with that of the third quarter.
For retail loan, the NPL formation was around RMB 6.3 billion. For credit card, the new formation is RMB 10 billion. Generally, the fourth quarter, the increase in the fourth quarter in terms of NPL formation are mostly from corporate, for corporate loan. The corporate loan, these NPL formation loan are mostly from corporate property industry, some existing risk, identified risks, and there are some exposure of individual cases and individual clients. Some individual event cases or clients, its risk exposure, they will cast influence on the NPL formation for a single quarter. There will be some fluctuation during quarter-on-quarter indicator.
Overall speaking, if you take a look at our corporate NPL loan, we are experiencing some improvement. For us, since the year 2022, we begin to expose risk in the real estate sector. Ever since the year 2022, the real estate NPL formation tend to decrease. In the year 2025, our real estate NPL formation continue to decrease. It's also at the lowest point for the past five years. As seen from the first quarter of 2026, the corporate loan asset quality remains stable, and they're in order. For those risks that have already been exposed, especially for those real estate groups, we have made quite adequate and abundant provision. Though the average level of LLR was 3 x higher than the average level of those of the general corporate loan.
You have mentioned about the allowance coverage ratio. In the year 2025, the figure is 391%, which is 20 percentage points lower than that of the previous year. The fourth quarter NPL, we have made some provision 14.4% higher than that of the previous quarter. You can still see that the absolute level of our allowance cover ratio is still quite leading in the industry. Making provision is being influenced by many factors. We will make provision case by case, and we should take several factors into consideration. First, scale. The product structure, the corporate loan, and the retail loan were different in terms of their weighted risk and customer quality. The customer's internal rating are still factors that will influence the provision we made.
Including how do we take a look at the external macro environment. If we consider the external environment tend to be stable, or do we expect there are more uncertainties in the future? We will also consider this factor to make this consideration, and then to make a relevant provision. One very important factor is that during the phase of the post-pandemic era and the deep adjustment of the real estate property, these two periods of time are the major reason why we have been making abundant provision. Generally speaking, these two adverse factors, they are fading out. The real estate markets are in the process of hitting the bottom. We don't see the necessity to make even more provision for this industry. You can also take a look at our absolute level of the provision. It's quite abundant.
In the year 2021, the figure was RMB 37 billion. For the last year, the level was RMB 42.6 billion. Compared with our loan scale, the ratio experienced a slight decrease. The allowance coverage ratio is not the figure that we use to balance profit. It is calculated based on our expected credit loss, based on our loan scale, based on our internal credit rating. We will still make very abundant provision. If the NPL balance increase, it will cast influence on our provision. If one day our NPL balance stop to increase, I think we will see some uptick in our provision and in our allowance coverage ratio.
Thank you. In order to ensure the rights of the individual participant, we have collected beforehand through email about their questions. As most of the questions actually overlap with what we have also discussed previously, we will have one representative question read out by our staff. The question is, "CMB last year has received approval to establish AIC. I would like to understand what is the major business of this company. And except for debt-to-equity transfer business, do you consider making equity investment? What is the function of this company's role in CMB's comprehensive development?"
Thank you for the question. Last year, approved by the regulator that we have set up our investment company, namely the AIC. Last year we have opened the AIC successfully, and this is a very important milestone of our comprehensive operation in order to have a better integration of Investment Banking and also Commercial Banking to better service those startup companies. We can provide more comprehensive service and have coordinated business in terms of Investment Banking and also Commercial Banking.
According to the regulator that wanted us to, in 2018, there was a batch of the AIC company that have been set up to do the business, namely to convert the debt into equity, and now nowadays business are also changing, so more are doing towards the equity investment directly. CMB's AIC will be both for the debt conversion to equity business and also at the same time equity investment services. For Commercial Banking, doing equity investment is kind of a very big transition of the business model. We need to have right person and right business model in place and right purpose in place. From the regulator's perspective, they are...
For newly opened AIC, the regulator need to have new approval for the business qualification on that, and we are also have conversation with the regulator and communicating with the regulator because we have a very good foundation in terms of equity investment, like we have the CMB International and also CMB International Capital. We have done equity investment in the past. We have around a team of 200 people. We have many successful investment in the past, and many of the enterprises have been successfully IPOed, and have done quite good results.
For equity investment, if we can get the approval from the regulator, then means that AIC together with CMB Leasing can have a better integration of the business and to, based on the business foundation that we have and the team that we have, to better have a development of our AIC.
Thank you. Now for second section, for a question from the media.
Yes, please. I'm from the Securities Times. My question is for the Chairman. Just now you mentioned about the moat. You have mentioned that for many times and also in your speech in the annual report, you also say we need to have a differentiated moat. A follow-up question about the moat is that in the past, people are talking about retail service and brand name. These are the moat and the also funding source of CMB. Entering into the new era, what will be the difference of the new moat for CMB? Will that be technology, talent or ecosystem? If you have some keywords to conclude CMB's next five years' core competitiveness, what would you quote? Which keywords will you use?
The so-called moat is the core competitiveness. Which area that we are stronger than other people and which we are far ahead of other people. Just now I mentioned in the past, the moat for CMB, many people are saying is, retail is the moat, and fintech was the moat.
I think the real moat is that our philosophy, namely customer-centric, which has been integrated already, internalized into our corporate culture and has been become a routine of our staff. This is the biggest difference between CMB and other enterprises. If you go to the sub-branches of CMB, after the working hour, After working hours, you go to the branches there, You can see the difference between CMB and other people. Our staffs never off work on time. Just now before the results, I asked the office of the Board, so after the results announcement, they have passed the information to me about the information they get for the communication between them and the investors.
I think this is the culture, and this is the biggest moat that we have. No matter is the concept, no matter is the philosophy or technology, it's all done by human beings. Even without this culture, without this dedication, spirit to work, other moat is nothing, that would be fall down. This is a keystone that support our moat, that CMB is customer-centric. It's the moat that we have built up. No matter is talent, no matter is technology or other core competitiveness, I think the keystone is the culture.
As long as culture is there, then we have moat. One day we changed our culture, customer-centric culture, then I think the other moat will also be diminished. In the past, in the downward cycle of the banking industry, we have also seen some downturn, but still we continue to have a better performance than peers. This relies on the culture of CMB.
Thank you, Chairman. The next question?
Thank you. I'm from the 21st Century. My question is about the deposit movement. There are many institutions saying that in 2019, there will be around RMB 5 billion-RMB 7 billion deposits mature in 2026. Some may go to Wealth Management or fixed income and other products. From the liability perspective, whether you are facing some pressure. When these kind of term deposits mature, what is your observation, whether they will go to other aspects? Just now you mentioned about your subsidiaries and how you can get the deposits which are matured in 2026.
Thank you for your question. Recently there's a lot of talks and discussions on that. My understanding on that is currently for the matured term deposit, the outflow of the matured term deposit, there will be two key elements. How much will mature, and second, whether it will be outflow. The media have calculated an amount, and for CMB, the amount that will be mature, the term deposit this year will be a little bit higher than what we have in the last year, but it's not an extraordinary number. I think it's still in a normal range.
I think people are more concerned about in this low interest rate environment if the deposit rate cannot satisfy customers' demand for the asset yield, how where the deposit will go. Some say may go to the capital market, some say may go to Wealth Management and also mutual fund products. There are many discussions on that. For the deposit outflow, I think from a different angle is that from the customer's perspective, if the deposit outflow, where it will go. If it goes to the Wealth Management or mutual fund products, then we think that we can provide service to maintain the AUM with CMB.
Maybe it may not be shown as a liability, but it's still the customer funds is with us, so we can say that outflow of deposit but it's not an outflow of customer. That is why we emphasize the definition of AUM. That is why you see last year our AUM is up to RMB 17 trillion and a growth rate of 14%. This is also a way of retention of the deposit, and we are not worried about that. The second angle that can provide is from the funding perspective. Some funding going from the deposit go to capital market as the stock, which in return can be a deposit as the third party deposit with us. These are recorded as a interbank deposit for us.
From the funding perspective, if we can provide a service and then can continue to have an inflow from the interbank market, it means that outflow of deposit by funding is not outflowing. From this perspective, from these two perspectives, outflow or maturing of the term deposit is not a terrible thing. The first one, what we are trying to do is not to prevent an outflow of deposits, namely to have abundant products in place and also to prevent the deposit outflow. Secondly, if deposit really outflows, then we have products in place to retain the customer's AUM with us. Just now you mentioned about the subsidiary of CMB. We have Wealth Management subsidiary. This is also a test of the professionalism of our subsidiary, and it means that taking the funding to continue to be within the bank.
Secondly, we will service our financial institution customer, namely the funds can in return inflow into CMB from the capital market. Fourthly, very important, I think the outflow of the deposit is also a reshuffle of the banking sector for if we can use our advantage and service and product to retain or regain the market share with us to have more funding from the market. This is something that we are working for. Thank you.
Thank you. Next question?
I'm from Sing Tao report. The first one is for cross-border business. In 2025 for CMB has actually the funding between the CMB and also the overseas funding can have a connection on that. What is the plan for CMB's plan for the Bay Area, and in 2026, how you can use the platform in Hong Kong to have a better cooperation with the institution in Hong Kong? Secondly is for Wealth Management. My question is for Mr. Peng. Wealth management is regarded as a area of the growth of CMB. How do you expect the fee income from Wealth Management and also that overall fee income for 2026?
Thank you for the question. I will answer your first question. Just now I mentioned that CMB highly emphasized on the cross-border business and highly emphasize the Bay Area in economic integration of the Bay Area, and we want to have a bigger play in the Bay Area. CMB's headquarter is in Shenzhen.
For the mid and large-size enterprises, we are the very few banks that have headquarters in Shenzhen. Secondly, in Hong Kong, we have a Wing Lung Bank, we have CMB International, and we have CMB branch. Also in Macau, we also have our branch. We have covered major cities in the Bay Area. This is our geographical advantage. Thirdly, from the national policy also support the growth of the Bay Area and to improve the influence of the Bay Area and to have a better connection between the three cities in the Bay Area, especially the funding connection between the cities. It means that we can have more business in this area, such as for the Wealth Management Connect and our market share of the Wealth Management Connect of CMB is leading. We are promoting the capital market.
To strengthen, such as Hong Kong is improving stance and positioning as a financial center. We are strengthening our cooperation with the financial institutions in Hong Kong so that many China domestic enterprises are going IPO in the H-share. Our CMB International is playing a bigger role on that, such as for IPO underwriting. IPO sponsor, they are leading the market. For commercial banks we have Wing Lung Bank, and Wing Lung Bank can also be a collection bank for the IPO. This is the comprehensive service that we can provide to the enterprises that are going to the overseas market. Domestic residents are having more investments in Hong Kong because the overseas products have a better yield for customers.
Some of the customers would like to have some overseas allocation. We are strengthening our capability in this regard, and I think that these are also paying off and taking quite good results. These are the advantage that we have taken from the external environment and also from what we have our own institution. I do think that in the future there will be very big opportunity, especially in the major Bay Areas in the world, there will be top in financial institutions which will merge. In Bay Area, there are already some very leading financial institutions among the Bay Areas.
CMB even though have only a history of 39 years old, but I think we have the advantage in terms of geographical advantage, and we have a coordination between the domestic and also overseas platforms, so we will have a better play in this regard to support the integration of the Bay Area, to support the prosperity of Hong Kong. A brief answer to your second question. Last year, fee income was up by 4%, or over 4%, this is mainly driven by Wealth Management products, which is up by 21%. The contribution was from the agency sales of the Wealth Management up by 19% and 40% for mutual funds. Also we have seen growth on other agency sales of the trust products.
There's a small decline on the agency sales fee of the insurance products. It's mainly because of the change of our product structure. If you look at the premium, it's up by 27%, but due to the structural change, the realization of the fee income that we get from the insurance products is changing. Namely from we are. That is why have led to a decline on that front. I think the external environment has been quite beneficial to the fee income of Wealth Management. In 2026 we are more optimistic on that, especially from the national policy also regarded regarding consumption as a very important have played a key role in the future.
These are the positive factors for net fee income, but there are also challenges as well. As we can see, geopolitical conflicts having quite a posing risk to the economy. Secondly, there's a policy side for the fee revenue mutual fund as well. Thirdly, from the consumption side, even though there are many policies, but still depending on the real effect, whether you can drive our credit card fee income or not. We think that the fee income. We hope that it will be better than last year, but there are also structural problems like the credit card is still facing great pressure on that. We hope that the decline of our credit card magnitude will be better than last year. Also for fee-based income, we hope that it can continue to have a good growth. Thank you.
Due to the time constraint, I think the last question from the media.
Dear senior management, I am Shanghai Securities, Xu Xiaoxiao. I have a question for Mr. Wang. In such a backdrop of narrowing NIM, you proposed a value creation bank strategy and deepened a full initiative transformation. I would like to understand these strategies. What changes have it brought for CMB in specific business development?
Thank you for your question. In the interest rate declining environment, fee reduction and narrower net NIM, these challenges have brought pressure for our development. We proposed a value creation bank strategy that is our philosophy to create value for customer, shareholder, partners and the society, and to realize common prosperity of all. This is a philosophy. It's also a guiding principle for us to serve as a underlying principle to create value instead of expanding scale separately. It requires us to provide better service to our clients to increase volume, increase value, to make a good judgment of what business is good business and how to cash our business development into return to the society. This will contribute to the bank's sustainable development. Value creation bank strategy is bringing changes for us in our methodology and our philosophy of operation.
We are more reasonable, and we tend to respect the principle of banking operation. In international development, in comprehensive development, we all see contribution brought by these initiatives. In financial indicators, the four initiative have also contribute to our capability of making sustainable development. I think a digital and intelligent development and comprehensive development, these will help us to find our strength and to make up for what we are not good at. So, the four initiative bring us business returns, but also enhance our capability. Thank you.
Thank you, President Wang. Due to time limit, we have now conclude today's meeting. For more information and details, you may refer to the annual report we released online. If you have more questions or comments, you are more than welcome to contact the CMB IR team. Thank you again. Goodbye.