ABC Bank’s Earnings Call Reveals Growth and Future Strategies, according to

ABC Bank’s Earnings Call Reveals Growth and Future Strategies, according to

Agricultural Bank of China (OTC:) (ABC) has disclosed its annual financial results for 2023, highlighting steady growth in operating revenue and net profit, with a focus on rural revitalization and digital transformation. ABC reported operating income of RMB694.8 billion and a net profit of RMB269.8 billion, reflecting a return on equity (ROE) of 10.91%.

The bank’s total assets have reached RMB39.9 trillion, with an increase in loans to RMB22.6 trillion. The non-performing loan (NPL) ratio has decreased to 1.33%, and provision coverage has reached 303.87%. Customer deposits grew to RMB28.5 trillion. Looking ahead, ABC plans to leverage technology and focus on rural areas, agriculture, and farmers to drive future operations, with a positive outlook for the economic environment and credit demand in 2024.

Key Takeaways

  • ABC’s operating income reached RMB694.8 billion, with net profit at RMB269.8 billion.
  • Return on equity (ROE) stood at 10.91%.
  • Total assets reached RMB39.9 trillion, with loans increasing to RMB22.6 trillion.
  • The NPL ratio decreased to 1.33%, with provision coverage at 303.87%.
  • Customer deposits grew to RMB28.5 trillion.
  • ABC plans to focus on rural revitalization, digital transformation, and green finance.

Company Outlook

  • ABC aims to coordinate urban and rural markets for increased security and high-quality development.
  • The bank will leverage technology for future operations, with a focus on rural areas, agriculture, and farmers.
  • ABC has set loan growth targets for county-level finance at RMB1.3 trillion, inclusive financing at RMB800 billion, and green loans at RMB1 trillion.

Bearish Highlights

  • The bank maintains a cautious approach to risk management, aiming to balance profitability with risk.

Bullish Highlights

  • ABC has surpassed industry counterparts in loan issuance to newly emerging and green industries.
  • Individual loans increased by over RMB500 billion, maintaining ABC’s first-place position in the industry for the fourth consecutive year.
  • ABC’s retail credit balance exceeded RMB8 trillion, with a total loan balance of RMB2.891 trillion.


  • There were no specific misses mentioned in the earnings call summary provided.

Q&A Highlights

  • ABC reported a balance of loans to private enterprises at RMB5.5 trillion in 2023, a 25.6% increase.
  • The interest rate for newly issued loans to private enterprises decreased to 3.06%.
  • The bank is committed to supporting the private economy with increased resource allocation, specialized services, and green initiatives.

Agricultural Bank of China (ABC), with its ticker symbol not provided, has demonstrated a strong financial performance in 2023, backed by strategic initiatives aimed at rural development and digital innovation. The bank’s commitment to providing high-quality financial services, particularly in the agro-related and green finance sectors, positions it to capitalize on the positive economic trends and increasing credit demand anticipated in 2024. ABC’s approach to balancing growth with prudent risk management underscores its dedication to long-term profitability and support of the real economy.

InvestingPro Insights

Agricultural Bank of China’s (ACGBY) latest financials show a company that is not only a dominant force in the banking industry but also one that is trading at a very attractive price point. Here are some key insights from InvestingPro that could be crucial for investors considering ACGBY:

  • The bank’s P/E ratio stands at a modest 5.83, with an adjusted P/E ratio for the last twelve months as of Q4 2023 at 5.71. This suggests that the bank is trading at a low earnings multiple, which could indicate that the stock is undervalued relative to its earnings capacity.
  • Despite a slight decline in revenue growth on a quarterly basis in Q4 2023, the bank has maintained a strong operating income margin of 54.89% over the last twelve months. This robust margin performance underscores the bank’s operational efficiency and its ability to convert revenue into profit effectively.
  • For income-focused investors, ACGBY pays a significant dividend with a yield of 6.19%, and it has a history of maintaining dividend payments for 14 consecutive years. This consistent dividend history may appeal to those looking for steady income streams in their investment portfolios.

InvestingPro Tips highlight that ACGBY is quickly burning through cash and suffers from weak gross profit margins. On the other hand, analysts predict the company will be profitable this year, and it has been profitable over the last twelve months. Moreover, ACGBY is a prominent player in the Banks industry, and the valuation implies a poor free cash flow yield.

For more in-depth analysis and additional InvestingPro Tips, which include insights such as the company’s cash flow status and gross profit margins, investors can visit There are 11 additional InvestingPro Tips available to help investors make more informed decisions. To access these valuable insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

Full transcript – Agricultural Bank of China PK (ACGBY) Q4 2023:

Gu Shu: (Interpreted) Ladies and gentlemen, good afternoon. I would like to say welcome to all the investors, analysts and media friends to attend the 2023 Annual Results Announcement of the ABC. Well, actually, for ABC, we have left Hong Kong for eight years in terms of the convening of our announcements. So we are very happy to come back to Hong Kong to have this face-to-face meeting with all of you. And also we have a lot of friends, analysts attending this conference online or in Beijing’s venue. And today we also have management representatives as well as independent directors attending this conference. So we can start from our operating results of 2023 for the ABC. Last year, China’s economy rebounded, paving a solid foundation for the development of finance industry. And our performance was also pretty good last year. So to sum it up, I think there are two points worth mentioning. The first one is that our operating revenue is experiencing steady growth. Our net profits was RMB269.8 billion, a growth rate of 4.2%, and ROE is 10.91%. Our operating income was RMB694.8 billion, maintaining positive growth. And in the last year, we’ve been faced with very complex external environment. Our operating income still remains positive growth. That is not an easy task for us to do. Second, our strength of the co-group continues to increase. Our total assets reached RMB39.9 trillion, an increase of RMB5.9 trillion. And the loans increased by RMB2.85 trillion to RMB22.6 trillion. And the NPL ratio was 1.33%, down by 0.44 percentage points to compare with the end of previous year. And our provision coverage has reached 303.87%. And the balance of the customer deposits was RMB28.5 trillion. And domestically speaking, the deposits of our customers domestically increased by RMB3.91 trillion to compare with the end of last year. And another statistic we want to disclose is that our daily increments, the average daily increments of the deposits of our domestic customer would reach RMB3.9 trillion. So pretty similar to our deposits, the total amount of our deposits. And we replenished our capital by RMB230 billion. And our capital adequacy rate was 17.14%. So here we have already illustrated you about our revenues, as well as our income states — some important contents or highlights in our income statement. So looking back at our operation last year, we believe that we need to adhere to a systematic concept of management. We need to achieve three endeavors related to coordination. That is why we could achieve such results last year. And the very first reason for our rebound last year is because of the rebound of the macro economy. And for us, I think we need to do three coordinating endeavors. And the first one is that we need to coordinate the two markets in the urban area and the rural area. And now we have 23,000 outlets of ABC and half of them are located in counties and another half are located in the urban areas. And the layout of our customer base in rural areas and urban areas are kind of balanced. This is our biggest differentiator, which also represents our competitive advantages. And based on the different features of different regions, we have made a lot of innovations or tailored made innovations for those county outlets or customers in the county areas to improve our capacity to serve the residents in the county areas. And now we have 281 products related to rural revival and we have 255 products with unique county characteristics. And in the county at the county-level, we have a total of 546 million in customers in rural or county areas, accounting for 63% of the total customers we have in ABC. And in ABC, the revenues in the county — at the county-level accounts for 47.7% and the increased rate — the growth rate is 4 percentage points higher than the industrial average. And the balance of the loan is RMB8.78 trillion, an increase of RMB1.45 trillion. And our county-level loan has increased at the rate of 19.8% higher than the average of the whole industry. So in the past three years, the scale of deposits and loans have both increased and the county-level deposits and loans are increasing in its share in our overall bank. But if we zoom out, not only looking at a three years scale, we could see that the county-level loans have risen more rapidly. So that means for ABC, we are using — we are injecting lots of capital to revive the rural areas, and to promote integrated development of the urban and rural areas as a whole. That’s the first coordinating the endeavor we need to do. We need to coordinate the urban area and the rural area. The second thing we need to do is to coordinate a high level security and high level, high-quality development. And we have an increasing supply of finance. Last year, we have issued a loan worth of RMB2.85 trillion. And last year, our NPL ratio, it was 1.33% down by 0.04 percentage points last year for three consecutive years. And in our annual report, we have also disclosed a lot of forward-looking indicators for our asset quality. For example, our NPL ratio was 1.33%. And our special mentioned loans ratio is 1.42%, down by 0.04 percentage points. And our overdue loan rate was 1.08%. And our provision coverage was 303.87%, increasing at a relatively high level at the beginning of last year. In terms of deposits, we not only organize the funds in a really good manner, we also provide good services for our clients. And the increments of our deposits was RMB3.91 trillion, ranking the top in the industry. And we are optimizing our services provided to the clients. And the complaints, number of complaints per thousand outlets and per 10 million customers is pretty low, lower than the industry average. And a third coordinating endeavor we need to do is to coordinate our current operation and future development. So here I want to stress a technology. Technology will reshape our future operation and is to promote digitalization and to better leverage technologies, so as to lay a solid foundation for future development. So here to sum up how we’re going to leverage technology to facilitate our future development, I would like to use three sentences to sum up that. First one — firstly, our business, our core business system have already basically completed the transformation of distributed architecture. And last year we have already finished the system migration for individual customers, totaling 800 million. And our daily transaction volume, our transaction volume has exceeded 1.9 billion. And the second one is that we need to increase our capacity and scale as well as our computing power. And we all know that AI is based on computing power. So we are accelerating our speed to — accelerating to develop our AI capacity. And we have also developed our centers, data centers in Inner Mongolia. We have already finished the first phase of the construction of our computer, our data center and computer room in Inner Mongolia for the first phase. And last year we started to build the second phase of our data center — we started to build the second high into operation in 2025, increasing our computing power. And the third thing I want to mention is that we need to continually establish our business model driven by data. We have already built 42,000 high frequency Internet scenarios. And the scenario based financial ecology continue to expand, improving our efficiency to provide services to the customers in a primary level. And the user experience of our bank application has also been optimized. Our MAU, the MAU of our mobile app has exceeded to 230 million. And we have also optimized our products in terms of digital debt products. So the balance of the e-Loan of ABC has increased by 39% last year. And we have a lot of experience in last year’s operation. So we also want to — just now I’ve already summed up our endeavors in the past year. So now I’m going to talk about this year’s operation. And in terms of the overall market, the economic growth potential in China is still very large and the resilience is sufficient. And this year, our economic growth target is set to be 5%, still very high in the global arena, providing a very favorable environment for the development of our bank. And if we look at the first two months in this year, you will see that the main indicators of production demand in the first two years is increasing. For example, like the retail sales, the total retail sales of consumer goods is increasing and the industrial value-added and export growth were also better than the market expectation. So our economy has started steadily this year and our credit demand is also increasing in a good way. So we believe that China’s economy will move towards a positive direction, providing a favorable environment for our operation. And in 2024, we will do a better job in our businesses related to rural area, agriculture and farmers, and to provide better services for real economy and to better serve the stability of the finance as a whole. And we will also deliver more value for our shareholders. And finally, I hope that we can gain the support from you as always. And now I will open the floor for questions. The Chief Risk Officer, Mr. Wu Gang, will preside over this Q&A session.

A – Wu Gang: (Interpreted) Thank you, Mr. Gu. So during this Q&A session, you can only — for one person, you can only raise one question. And before you raise a question, please introduce yourself as well as your department you’re from. So the first question will be raised in the Hong Kong venue. The lady in the second row.

Unidentified Analyst: Thank you, Mr. Wu for giving me this opportunity to raise this question. I’m from UBS. I’m Yan Weizhi (ph). It’s really happy to see you again here. And just now you’ve said that we have a really good year of 2023. So I would like to congratulate you on that. In this complex environment, your stock price is very positive, especially compared with our counterparts. And my question is related to credit growth. And just now you’ve mentioned that last year we have an increase of 14% to 15% of credit growth. So my question is whether this credit growth is sustainable and where can we see this growth? If we look at this growth in terms of individual loan or retail sale loan, what is the proportion in that? And in terms of retail, for retail, have we seen any increase of the credit demand or credit, the loan insurance demand there? And is this credit growth sustainable?

Gu Shu: (Interpreted) Well, actually, last year our issuance of loan is increasing. And our pace of loan insurance is consistent with our national policies as well as our management level at ABC. So just now you’ve also mentioned that the overall landscape is positive. We have an increased loan issuance scale last year. And the second thing I want to mention is that the county-level loan issuance was increasing really fast, accounting for about half of the total loans issued to our clients. And also, last year we’ve issued a lot of loans to those newly emerging industries as well as green industries. And our loans issued to those industries is higher than our counterparts in the industry. And also for individual loans, last year we’ve had a — the individual loan has increased by more than 500 billion last year, maintaining the first place in the industry for four consecutive years. And for consumption loan, individual consumption loans last year, the figure has exceeded 100 billion.

Unidentified Analyst: So for this year, what is about the demand of loans? Can this growth trend sustain?

Gu Shu: (Interpreted) That’s a very important question that we need to answer. And just now I said the economy is moving toward a positive direction. So I think the reserve and the demand of the loans or the credit will also increase toward a positive direction. And in opening remarks, I’ve briefly talked about the loan issuance. We will definitely stick to our main principal business area, that is our countywide loans or countywide finance. And secondly, we need to focus more on rural areas, agriculture and farmers. And this year there are several focuses for us this year. First of all, we need to continue to provide better services in terms of loan issuance for county-level related to rural areas, agriculture and farmers. And this year, we plan to have a loan growth in the county-level reaching RMB1.3 trillion, accounting for 50% of the overall loans being issued from ABC. And for county-level loans, we need to talk about the industries involved in this area related to — are related to grain or food security and so on. So in related areas, our loan issuance is expected to increase by 200 billion and the balance will exceed 1 trillion. And for the loans — in terms of the loans providing for those farmers, we expect to see a growth of RMB300 billion and the balance would reach RMB1.5 trillion. And if we can really give out 300 billion loans to the rural households, it will be definitely sustainable. And for individual loans, we have personal business loans, which is related to inclusive financing. And we also have individual consumption loans and the housing loans. And these endeavors are aiming to stabilize the real estate market and to prevent systematic risks in a macro economy. So we will definitely stick to the monetary policies as well as regulatory policies of the country. And just now you’ve also mentioned personal or individual loans. From the perspective of ABC, the 300 billion loans to farmers is a key for us. If we can manage these loans, these amount of loans very well, we can stabilize the whole individual loan market. So we need to better correlate ourselves to rural areas, agriculture and farmers. And also we need to focus on universal and inclusive financing. And the ABC is actually the bank that provides the most loans to the inclusive finance fields and serves the most customers in this area. In 2024, we aim to increase our inclusive financing by RMB800 billion. And the third thing is that we need to be greener. And as you can see, our logo is green. So we need to be greener. We need to provide more green loans. And we expect to increase our green loans by RMB1 trillion. So I’ve already told you all of these statistics or the scale. And fourth, we need to improve our supply, our supply of financing to facilitate the improvement of the real economy, especially those industries related to the new productive forces. The financing supply should be consistent with — should be aligned with the demands of the industrial transformation in China. It should serve the Chinese modernization. So the loans related to rural areas, agriculture and farmers, and the loans related to inclusive financing, and the green loans as well as the loans aiming to facilitate new productive forces. All aligned with our positioning and our cultural DNA. And just now I gave you so many numbers. If you add them up, it will be astronomical. And of course, so here I want to clarify a bit. Just now I’ve mentioned so many numbers and some of them are overlapping. For example, some of the loans related to rural areas, agriculture and farmers, they are also included in green loans. Some of them are also related to inclusive financing. So you can never like add them up very simply. So all-in-all, we need to strike a balance of our loans.

Wu Gang: (Interpreted) And now the next question will come from the Beijing venue. The left area lady in the third row.

Unidentified Analyst: Thank you. I’m with Xinhua News Agency. I’m (indiscernible). And my question is about the quality of the credit assets. So my question is, where are the risks of the credit lie in ABC in 2003? We know that ABC has spent a lot in terms of — it has spent more in facilitating rural economy. So the debt, the loan is increasing really fast. Will that pose any pressure for the future asset quality of ABC?

Wu Gang: So Mr. Zhang Xuguang will answer this question.

Zhang Xuguang: Actually, ensuring preventing risk or minimizing risk is our bottom line. We need to do — at least we need to do that. And recently, our asset quality has continued to optimize. And NPL ratio was 1.33% down by 0.04 percentage point. And the incidence rate of NPL rate was 0.85% down by 0.07 percentage point. And the special mention loan ratio was 1.42% down by 0.04 percentage point to compare with last year. And our overdue loan ratio was 1.08% equivalent to the beginning of the year. And the negative difference between expected and the Caesar (ph) difference of the expected loan and NPL was RMB56.2 billion, which has been negative for 14 consecutive years. And the provision coverage was 303.87% down by 1.27 percentage points. So we increase our capability to fight against risks. And our NPL mainly concentrated in real estate market. And it is the overall market, the overall risk is preventable, is controllable. And we have implemented our 16 measures to minimize the risk in this area. And so, which has already generated good effect. And the NPL ratio of real estate is going down recently. So you can see that our risk management has been well performed. And in the future, we are very confident about our risk control. And also, you’ve mentioned we have really fast credit or loan issuance growth. We will always strike a balance between the risk prevention and the business development. We will definitely ensure no systematic risk will happen. And this year, the quality of our assets will remain stable based on several reasons. First of all, the macro economy is very positive, providing a favorable environment for the quality of our assets. And we’ll also optimize our structure of our credit or loans. And 80% of our loans in 2023 were issued to manufacturing or advanced manufacturing. And we also continue our countercyclical adjustment capabilities. And we have also continued to strengthen our research adjustments capability to manage the credit risks. So we are very confident that we can continue the stable asset quality of ABC.

Wu Gang: So now the next question comes from the Hong Kong venue. The left area, the first, the guest in the first row.

Unidentified Analyst: Hi, Mr. Gu. I’m with Phoenix Satellite TV. And we know that the profitability of ABC has maintained a really positive growth. So in the future, in the following years, how can we strike a balance between the profitability and our risks? So how can you do that? How can you strike a balance between serving the real economy and the management of the risks? And how do you perceive the net interest spreads as well as — the net interest margin and profitability of ABC this year?

Gu Shu: I know that a lot of people are concerned about our profitability. I want to answer this question from the following perspectives. First of all, for a bank, no matter we’re talking about the long-term or short-term vision, if we’re going to have a good operation, the most important thing is to stabilize our asset quality, especially for the long-term. If we do not have a good quality asset, even if we can make profit in the short-term or lose money in the long-term. So the first priority for us is to stabilize our asset quality. And second, the current economy is recovering really fast and we have seen the emerging of new productive forces. And just now we’ve mentioned that China’s economy is very resilient and the recovery of the economy is undeniable. And the overall financial risks of the whole industry is controllable. And just now we’ve repeatedly said the same thing, that we were repeatedly discussing about the quality of assets. And your question is also related to quality assets. So for us in ABC, the non-performing loan, the NPL ratio was 1.33%. We have disclosed that in our report and we have also included many forward-looking indicators of risks in our annual report.

Unidentified Company Representative: Just as Mr. Shu mentioned, the incurrence rate of the NPL in 2023 was 0.85% down by 0.07 percentage points. An overdue loan was 1.08%. That is another forward-looking indicator. And the Cesar difference between overdue and non-performing loans as well as the provision coverage ratio, these are all the forward-looking indicators to identify the risks, assuring all the clients that ABC will definitely strike a balance of profitability both in the long run and in the short term. That’s the first point I want to mention. And secondly, what we need to do is to stabilize the net interest margin, the NIM. And we also need to look at NIM in the long run. We need to look at the assets and liability at the same time from the perspective of assets. And last year, the interest rate of our loan was 3.79% down by 30 bps to compare with last year, which is also similar to our counterparts in the industry. It is because we really wanted to support the real economy. We want to provide them with more profits, benefits. So next step, we will better coordinate this whole mechanism. And we will also optimize the asset margin pricing. While supporting the real economy, we will also maintain sustainable development for ourselves. So from the perspective of liability, just now I’ve mentioned that the deposits of customers of ABC has increased at the fastest speed among the counterparts. The daily increment as well as annual increments are synchronous. Another thing I want to another highlight in our annual report, I want to mention is that our interest payment rate of our customer deposits is 1.71%, which is the best to compare with all the counterparts in our industry. And in 2024, for deposits, we will make more initiatives to promote digitalization to leverage our advantages of a massive scale of outlets and a customer base, and to provide more low-cost deposits. And for NIM, here I want to add something. When you are analyzing our annual report, if we’re going to look at the NIM risk, we should not only look at the interest rates of deposits and loans, we also need to look at the investment portfolios, because for other state-owned banks, the amount of their investments could reach over 10 trillion. So if you’re going to analyze NIM, you should not only look at the deposit and loan, you should also look at the investments. And last year, we’ve invested a lot in the government bonds. The interest rates are relatively low, of course, but it’s safe. And also, it can exempt tax for us. So if you are analyzing the NIM, you should also look at our income tax. It has changed drastically last year, so we strongly advise you to look at our tax, the investment and the tax, when you are analyzing NIM, the net interest margin. And thirdly, we need to stabilize the value delivered for those intermediate business services. On the one hand, we will continue to work for the real economy. And second, we need to improve our ability of comprehensive financial services. We will focus on key areas and promote the value to the intermediate business by providing customers with high-quality financial services. For example, for the consumption industry, we will seize the opportunity of resuming consumption growth. And we will also improve our capability of third-party payment credit cards. And in terms of the price, we will provide more benefits to our customers and third-party partners by lowering down the prices a little bit. We will also improve our comprehensive service capability. And for intermediate business, we also need to improve our international settlement, the RMB settlement, bond underwriting, and consulting business, and integrated services, and so on. So we need to look at different aspects. So all-in-all, we need to stabilize the asset quality. If we can stabilize that, we can provide basis for long-term and mid-term profitability. And if we can stabilize NIM, we can ensure that our profitability in 2024 is well assured. We reiterated that we need to make more benefits for the real economy. No matter for the regulatory body or other departments, no one was saying that we need to cut the price disorderly. We need to be — we need to stable this whole process. We need to do it. We need to cut the price in a steady way. And in CDF, China Development Forum, Premier Li Qiang has delivered a speech. He was saying that we need to slow down our economic growth in a steady way. That’s also what we need to do in the banking industry. We need to guarantee, stabilize our — guarantee the financial needs, ensure to meet the financial needs of our customers while maintaining the profitability of ourselves.

Wu Gang: So the next question should come from the Beijing venue. In the mid-area, the gentleman in the second row.

Unidentified Analyst: Thank you for giving me this opportunity to raise this question. I’m Ling Qi (ph) from CICC. And my question is related to individual or personal loans. And in 2023, in supporting personal consumption loan or business, individual business loan, what achievements have you achieved, have you got? And in 2024, what are your expectations on that?

Wu Gang: So, President Lin will answer this question.

Lin Li: Thank you for the question. China is really resilient and potential in terms of economic development. And the fundamentals or the basic trends for long-term improvement hasn’t changed. And ABC will resolutely stick to the decisions made by the party central committee. And we will actively serve for the steady growth, expand domestic demands, and to serve the people’s livelihood. And we will also better strike a balance between the services — of the services between the rural areas and urban areas. We will also do integration of offline and online services. And we will do a better job in terms of providing better services for those SMEs as well as individual businessmen in rural areas. We have achieved pretty good results. And as of the end of last year, our retail credit balance exceeded RMB8 trillion. And the personal loan, consumption loan, as well as the business loan and the credit loan, the balance in total reached RMB2.891 trillion. An annual increase of RMB690.4 billion. A year-on-year increase of RMB366.7 billion, up by 31.4%. And the growth has been maintained for four consecutive years. And in terms of management, we have done really concrete jobs in five perspectives. First, we always prioritize the expansion of the consumer financial services. Last year, the retail sales of consumer goods is rebounding. So based on the expansion of traditional consumption, we will accurately meet the demands of the new consumption. We have been actively integrating ourselves into green consumption, healthcare, NEV, home appliances, as well as the cultural tourism. So based on that, we will expand — cultivate and expand new customer groups and to increase the provision of loans for them. And in 2023, the resident customer loan increased by RMB147.1 billion. And the credit loan increased by RMB52.4 billion. And all year round, the total spending of the credit card has increased — has exceeded RMB2.2 trillion. Second, we will deeply cultivate inclusive financing. We are providing services for individual businesses, as well as SMEs. We have innovated our e-Loan for those — for farmers. We have also increased our loans providing for hospitality and retail and many other industries related to rural areas. And last year, we have issued RMB1.97 trillion of personal domestic loans, up by 38.3%. A year-on-year increase of RMB254.4 billion. And the annual increase, as well as the increased rate, has ranked top among all the counterparts. And our individual, industry and commercial households in our customer base reached 6.35 million, with the average balance of 29 trillion. And thirdly, we have leveraged our advantages of spending both urban and rural areas. We provide active services for rural revitalization. And in our operation, we always grasp the service, we always grasp the gist to provide services for rural revitalization. And we pay close attention to the upgrade in rural consumption. And we have also had — we also issued those net fast loans, or the entrepreneurship loan, as well as those other loans facilitating farmers to develop. And now, we have organized 18,000 service teams related to rural revitalization. And these teams will go to the fields, or the ordinary people’s, or the ordinary households to provide point-to-point financial services. And last year, the personal business loan could reach RMB1.62 trillion, up by RMB390.5 billion, accounting for 76% of the total increase of loans in the whole bank, up by 29 percentage points to compile with last year. And fourthly, we are also accelerating our digitalization process. And we will always be customer-centric and innovation-led. We will build a production system for online and offline collaboration. We will strengthen data-driven endeavors. And we will leverage more data capability to facilitate the business, to facilitate the services for our customers to save the customers time and energy. And we are also using smart technologies such as OCR, as well as digital figure, as well as many other new centralized authorization processes, making the whole process of providing services less time-consuming. And the digital application has already reached a share of 40% of all the services we provide. So our services have become smarter. And the fifth thing we need to do is to coordinate the development in a secure way. And we will strengthen our ability to be forward-looking and be more intelligent. And also we will be compliant with the risk control regulations. And we will also do a good job in protecting the rights and interests of our financial consumers. In 2023, our NPL ratio of personal loan and personal business loan is 1.04% and 0.88% relatively. So the overall risk is controllable. And NPL rate for credit cards was 1.4%. So the quality of our assets is pretty good, satisfying. So here I want to tell you that the retail credit business keeps the good momentum. And as of now, the increment of the retail loans has reached RMB492.4 billion, up by RMB192 billion year-on-year, ranking the first in the whole industry. So if we look at the asset, all of these individuals is conducive for us to stabilize our NIM. And in the next stage, we will further implement the guidelines of the National People’s Congress as well as the Financial Work Conference and Economic Work Conference as well as guidelines of the two sessions. We will provide better and high-quality financial services to our customers in the following years.

Wu Gang: And the next question comes from the Hong Kong venue. And the lady in the third row.

Claire Ouyang: Thank you for giving me this opportunity to raise the question. I’m Claire Ouyang from Goldman Sachs. And just now you have mentioned about the agro-related businesses, which is also your advantages. So what are the specific differentiator for you in terms of the countywide business? And in the future, how are we going to leverage these countywide businesses to better serve the rural revitalization while providing greater contribution to the profitability of the bank as a whole?

Wu Gang: So Mr. Liu Xiaopeng, responsible for agro-related business, will answer this question.

Liu Xiaopeng: Well, as a state-owned bank and a pillar providing services for rural areas, agriculture and farmers, we have implemented the government’s strategic plan to comprehensively promote rural revitalization. And we continue to increase our financial supply to agriculture, rural areas and farmers. And we have kept this good momentum. So the Chairman of the Board has already illustrated some of the advantages. I will build on his remarks from five perspectives. First, in terms of the integration or the interaction between urban and rural areas, and ABC is the only institution or commercial banks covering all counties in the country. And we expand the two major markets of the urban and rural areas. Half of our outlets are located in the county areas, in counties. So with the faster integration of urban and rural areas, more and more customers are laying out their business both in the urban area and rural area, making it easier for us to play out our advantages. And secondly, we have agro-related products. In addition to some products that are common for all the people, we have some specific agro-related products. For example, our branches has launched more than 280 products with rural characteristics. For example, we also have many subsidiaries located in the rural areas, focusing on the business in the rural area. And they have a strong comprehensive management capability, so they can provide diversified, comprehensive financial services for our clients in the rural areas. And fourthly, in terms of technological empowerment, ABC has continued to improve our investments in technology. We have the Huinong e-Loan and SME e-Loan. And these are part of the online agro-related loan product systems. And we also have the mobile banking application, as well as the agro-related applications, specifically for agriculture. And fifthly, we aim to develop our brand image as agro-friendly banks. And since our establishment 70 years ago, we have worked really hard to serve the agriculture rural areas as well as the farmers. And we have made positive contributions to poverty alleviation and rural virtualization, as well as the development of inclusive finance and green loans. And we have been widely recognized by all kinds of customers in rural areas. And ABC is also the only one bank recognized or rated at the highest level in terms of the services provided for the rural areas for three consecutive years. So in the future, we will continue to deepen our services for agriculture. And we will consolidate and improve our capability to provide financial services for rural areas and to better serve the implementation of the national rural virtualization strategy. And we want to make greater contributions in the following years. We will do it in three perspectives. Firstly, we will improve the financial supply for the counties so as to help them to meet the needs of grain and other agricultural products. And second, we will channel more funds to the counties. And on the basis of implementing the national policy of fee reduction and profits concession, we will actively channel the fund to go to the counties and to vigorously attract funds from the rural areas and to expand our local source of funds for our bank. And we will also cater to the rural needs in terms of settlement and deposits or financial or wealth management. And thirdly, we will consolidate and improve the effectiveness of business operation in the counties. We will follow the trend of AI, big model, the generative AI algorithm, as well as IoT to address the bottlenecks of agricultural development currently, which include high cost or high risk. So another goal for us is to reduce the NPL ratio and to improve the efficiency of operation.

Wu Gang: And the next question comes from the Beijing venue. So in the middle, in the rear, the lady. Thank you.

Unidentified Analyst: Thank you. I’m a journalist with 21st Century Business Herald. And just now Chairman Gu has mentioned technology will reshape the future of banks. So my question is related to fintech. Fintech is actually a very important force for financial institutions. And my question is about the digitalization of your of ABC. And in the next step, what kind of strategies will you adopt?

Wu Gang: So Mr. Xu, responsible for technology’s adoption, will answer this question.

Gu Shu: Thank you for the question. I want to answer your question from three perspectives. First, ABC is promoting digital transformation by using the technology, learn by doing. And we have grasped the essence of digital transformation. And the essence is to leverage data. So we haven’t done a large transformation of our old system. Instead, we built a data layer and enterprise architecture on the system. In 2023, we accelerated the promotion of cloud native data lake, data pool, as well as a real-time data warehouse platform. And we have initially established a data layer enterprise grade architecture. We spent a lot of time, energy, and resources to grasp construction and optimization of the model to better identify key products and to improve the precision marketing and the precision management. So as to develop a data driven operation model. And secondly, we need to have a layer solid foundation for digital transformation. We have a customer base of 880 million customers and the daily trading volume would peak. The peak of daily trading volume could be close to 2 billion. And for per second, the peak transactional volume could reach 50,000. So last year, we have basically completed the transformation of the distributed architecture. At the same time, we have safeguarded our stable operation. It is not an easy task to do. Because we have such a large volume of transactions. While at the same time, we need to stabilize the trade. It’s not easy. Let me give you a metaphor. If you only have 100 million customers, it’s like you are driving a truck carrying 10 tons of cargo. But if you have 800 million people, it’s like you are driving a truck carrying 80 tons. You cannot change your tires in the way. You should also ensure a smooth ride to avoid any accidents. So it’s not an easy task to do for us. In the past years, we have optimized our distributed computing center. As well as our disaster relief center, disaster preparedness center, and so on. We have also built our production operation system. And we have also built a network security defense system. So all-in-all, we’ve done a lot to guarantee the stability of our trade. And thirdly, we take the customer experience very seriously. But it’s very hard to satisfy every and each customer. To facilitate our customers to use every and each services, we want to use only one application to provide all the services. That means we integrate all the functions needed by individual retail customers in one application. That is something our peers want to do, but they haven’t done it yet. So in this way, we have increased the satisfaction of our customers. So at the end of 2023, the MOU of our mobile application could reach 213 million, leading the industry for 34 months in a row. Because we have already identified the most important thing is data. And we have also paid great attention to customer satisfaction. That is why we can achieve such large, such great results in terms of digital transformation. But what is our future expectation on digitalization? Also, we want to answer this part of the question from three perspectives. First of all, we will continue to reinforce our technology security. We will prioritize the security of our customers. And we will be responsible for them. That is why we will upgrade our network security and defense system for our data to make sure our financial services are safe, stable and precise. Second, we will make efforts to build a smart bank. AI is a buzzword. And in terms of earlier applications like semantic analysis, facial recognition, we have already adopted AI. But in the future, we will implement AI in a deeper and more profound way. We will improve a new data-driven operation and to accelerate the construction of smart banking. And third, we will deepen our online and offline collaborative operation. We will leverage the channel advantages of 22,000 outlets as well as the online advantage of more than 200 million MAU. So as to better collaborate both online and offline.

Wu Gang: So the next question comes from the Hong Kong venue. The left area are the guests, the lady from the fourth row.

Unidentified Analyst: Thank you for giving me this opportunity. I am with the Hong Kong Commercial Daily. I am Deng Jingle (ph). My question is about pension finance. According to the data released by the Ministry of Civil Affairs at the end of 2019, the 60-year-old population is 210 million and accounted for 14.9%. And the State Council has also released some documents related to the gray hair economy. So I want to know more about your strategy related to senior care finance as well as how you are going to adapt yourself to the aging society.

Wu Gang: So President Lin Li will answer this question because he is responsible for individual finance services.

Lin Li: Thank you for your question. Last year, after the convening of the Central Finance Work Conference, the ABC has deployed and implemented five endeavors. And we have specialized our research to promote the high-quality development of pension finance or senior care finance. And in this, we have made a plan featuring the three plus two high-quality senior care financing system. So the three here, the three plus two in the three covers pension finance, senior care finance, as well as senior care industry finance, so as to cater to the aging population in China. And the two, in the three plus two layout covers the consolidation of pension system as well as the financial technology support. And we will also strengthen our protection for customer rights. We will cater to the whole life cycle of customers and to have an overall planning and a forward-looking systematic layout. And in this plan, we have specifically identified 188 items of services to provide services and specific financial — differentiated financial products for the gray hair population. And in terms of pension, I think our country, China, has achieved remarkable results in safeguarding the senior people. And first of all, in terms of security, social security, the ABC has actively responded to the interprovincial social security interaction system. And now our social security card has already covered 272 million people in China. And our electronic social security card users has reached 125 million. And the medical insurance card has covered 68.57 million people. And in terms of annuity, we are making efforts in trusteeship as well as custodianship. And the annuity, the customer, the number of customers in annuity, in enterprise annuity, ranks the top in the industry and the scale of business also continues to grow. And in terms of individual pension, we have been the first in all the counterparts to provide a full portfolio of products related — including deposits, wealth management funds, insurance, family trusts. And the scale of personal pension accounts for the largest portion in China. And also in terms of the senior care services, our finance service, we have also done a lot to improve our services for the senior people. We strengthen our service channels and we also have the self-service devices specifically designed for the senior people. And we also optimized the mobile app for the senior people. For example, the mobile app will provide larger size of characters for the senior people. And we also have — in the outlets, we have also optimized the business processes to help those senior people to get their business done really smoothly. And we also provide special services for those disabled or the senior people suffering from dementia. And we have also improved our service system. We have a fast response mechanism and we also provide 100,000 door-to-door services for the elderly customers who has reduced mobility. And we also have the remote services provided for the senior care — for the senior people. And in terms of the pension products, we have commercial senior care insurance as well as exclusive commercial pension insurance. And now we have 131 pension-related funds and 14 insurance products. And we also have the senior care-related wealth management products. So in terms of both scale as well as diversity, we rank top among the industry. And we will make more efforts on that. And in terms of senior care industry, we believe this part needs our great support. We have released, relaxed, the extended — the scope of access to pension institutions so as to improve the availability of financing for pension institutions to support those senior care industry. And another thing we have done is to increase the provision of loans to inclusive pension institutions. And last year, the balance of the loan for the senior care institutions could reach RMB7 billion, up by 11%. So in the next step, ABC will continuously implement the decisions and arrangements of the CPC Central Committee. And we will be people-centric and play the advantages of ABC as well as our layout in both urban areas and rural areas. We will keep building demonstration outlets to cover more people. And we will also pay attention to science and technology and to develop new productive forces. And we are also actively exploring and promoting the digital service for the elderly people to make our services for elderly people more convenient and more professional.

Wu Gang: So the next question comes from the Beijing venue. On the right, the third row, the gentleman, please.

Tong Wu: Thank you for giving me this opportunity. I am Tong Wu from Citi Securities. And my question is related to the organization and staffing. And we know that serving the rural area and serving the resource of virtualization is one of your priorities. And last year, in the Economic Work Conference, the government has also emphasized that we need to coordinate rural virtualization and urban development. So in this regard, how can the ABC coordinate the services in rural virtualization as well as the agro-related businesses in terms of staffing and organization structure?

Wu Gang: And Mr. Liu will answer this question.

Liu Xiaopeng: Thank you for the question. Recently, the ABC has carried out in-depth, has carried out the policy of the CPC Central Committee to promote the rural virtualization and build financial system with Chinese characteristics. We have continued to optimize our layout in rural areas and to put more resources in those counties with high-quality financial services. In terms of organization or institutional establishment, based on our framework and organizational framework in the agricultural areas, we have optimized our channels providing services for the agricultural areas. And we have continued to strengthen our professional departments or service team for rural virtualization to make sure that we have a dedicated team to better serve the agro-related customers. Second, we have continued to optimize our business outlets layout in rural areas. We’ll have more agencies or outlets in rural areas. In 2023 (ph), among the newly established outlets, 70% were located in the county areas. And as of the end of 2023 (ph), the county-level outlets reached 12.7 thousand, accounting for 55.9% of the total number of the outlets covering all counties in the country. And third, we have strengthened our establishment or service channel establishment combining both online and offline services to improve the accessibility of financial services for all the people. And as of the end of 2023 (ph), our Jinsui Hui Nong cloud has welcomed 126,000 customers covering 2,542 counties and districts. And Hui Nong’s coverage has reached 97.8% and the registered customers on our mobile application could reach 229 million. And in terms of staffing, ABC has strengthened the construction of our workforce to better support the rural virtualization. And we have invested more human resources in the rural areas and 50% of our recruitment, personnel recruitment, are sent out to rural areas. And recently, we have recruited 41,000 new employees in the county-level outlets. And as of the end of last year, the total number of the county-level employees could reach 188,000, accounting for 42% of the total number of employees of the bank. And second, we have strengthened our cultivation of the talents in rural areas and in total, we have cultivated and selected county-level young talents, totaling 18,000. And we also provide special support for those talents working in the county-level. And thirdly, we have strengthened the construction of the county-level account manager team and every year, we will have a special recruitment of the account managers and we will help train them, train their business skills, so as to improve the efficiency of serving the agricultural areas. And the next step, we will further strengthen our construction of professional departments and service team for agriculture and we’ll also optimize the layout of our service structure. Featuring both online and offline, so as to improve the coverage of our financial services.

Wu Gang: And the next question comes from Hong Kong venue. So how about the rear of this room, maybe on the right, the lady in the five row.

Katelyn Lilly: Thank you for giving me this opportunity. I’m Katelyn Lilly from JPMorgan Chase (NYSE:). My question is related to green finance. I know green finance is a part of your strategy. So in terms of green finance, what are the characteristics and how can we strike a balance between the volume and price as well as the price and the risk?

Wu Gang: So Mr. Zhang Xuguang will answer this question.

Zhang Xuguang: Thank you for the question. Well, the Central Financial Work Conference has put forward the five endeavors for us and green finance is an important part of it. So the ABC has always attached great importance to green finance. In 2021 (ph), green finance has been included in the three top strategies of our 14th Five-Year Plan. It’s our top priority and at the end of 2023, the balance of the green credit is RMB4.05 trillion, which is released by the state administration of financial regulation, increased by RMB1.35 trillion to compile with the beginning of the year, striking a record high. So our characteristic is that we will always serve the agricultural areas and integrate agricultural development and the green development and we have promoted many unique or feature products, for example, Hui Nong e-Fund, PV Fund, Ocean Husbandry Fund and the Beautiful Village Loan and so on. We have different kinds of loans specifically related to green finance. And as of 2023 (ph), our county-level green loan balance exceeded RMB1.6 trillion, accounted for more than 40% of the total green credit. And we have also made innovations in terms of the wealth management related to green finance and we also have diversified green investment and financing channels. And next, we will better leverage our positioning as a green bank and to improve our investment of green funds. And we will also help to support the green development of agriculture and rural areas to empower rural revitalization. And we will also integrate the concept of green development into all areas of ABC business philosophy. We will implement green offices, green outlets, implement green procurement and advocate green business travel. And we will also improve the quality of the information disclosure related to green finance so as to build ourselves into a green brand.

Wu Gang: So since the beginning of this conference, we also have many questions flooding in on the internet. So, how about we open the floor for questions for the online audience. Maybe we can have one more question from the online venue. So, I will read out the question. Recently, I watched a news saying that the balance of the inclusive finance of ABC had exceeded RMB3.5 trillion by 30 — the average annual growth rate in the past five years has reached 30%. So, now you have a pretty large credit or loan issuance recently. So, how can you ensure that the risk can be fully controlled? And whether inclusive financing is profitable? And how can you strike a balance between the pricing and the risks? So, Mr. Liu Xiaopeng will answer the question.

Liu Xiaopeng: I will answer this question. Well, the Work Economic Conference has included the inclusive financing into the five endeavors. So, it indicates the importance of inclusive financing for the livelihood and for the national economy. So, in the past several years, ABC has implemented the development strategy, the inclusive financing, and enhanced our efforts in that. We have expanded the coverage of inclusive financing, improved the quality for that, and increased the volume of inclusive financing. And by the end of last year, according to PBOC, the loans related to inclusive financing exceeded RMB3.5 trillion, an increase of about RMB1 trillion. In terms of coverage, our clients of inclusive financing, the number of SME clients with our inclusive financing reached 3.54 million households. So, in terms of quality of our assets, I think it’s still within the scope of regulatory requirements. And we are also improving our endeavors in inclusive financing in accordance with the requirements of the regulatory bodies. And based on the requirements of the SMEs and the private enterprises, as well as the characteristics of their development and operation, we are constantly promoting our mechanism, making it easier for the customers to apply for loans. And they will dare to borrow, and they are also willing to borrow money from us. And we will also increase our support services for the loans, the credit loans, medium and long-term loans, and so on, to satisfy the needs of SMEs and the private enterprises. And we’re also absolutely involved in construction the new generation of the system. And we will employ digital means to continuously improve the efficiency of the approval of the inclusive loans. And just now, in your question, you are wondering whether we can sustain this growth. So, to answer this question, I want to tell you that the ABC inclusive financial business is maintaining a good growth trend. And according to PBOC, the total loans of inclusive financial loans have exceeded RMB4 trillion, an increase of RMB400 million. And the number of inclusive small SME enterprises’ loans has already exceeded 4 million households. And we have a very large coverage of inclusive finance. Our inclusive financing has a really large coverage of customers. And we have a striking balance between the volume, price and the risks in terms of the volume or the amount. China’s economic development is of great potential, vitality, and resilience. We maintain a stable and positive development trend. And the country has attached great importance to inclusive financing. And we’ve created a very favorable environment for inclusive financing. And our market entities has reached 180 million. And every year, we will have more than tens of millions of new entities being registered in the market. So we have new market players, new business scenarios, and new financial demands flooding in, paving a solid foundation for the ABC to improve our inclusive financing. And in terms of the pricing, the interest rate of inclusive loan is consistent of the average interest rates of all the other loans in our bank. In 2023 (ph), our analyzed inclusive loan interest rates is 3.67%, decreased by 20 bps from the previous year. And relying on the strong support of the national policy as well as the transformation of the digital technologies, the cost for inclusive finance, the cost of capital, the operational cost, and the risk cost for inclusive finance can be better controlled. And we are solving the problem of the SMEs. We can reduce the price of the money they get. And from the perspective of the risks, and this year on, we have been very actively deploying technologies, making innovation in terms of risk control methods as well as a model of risk control. We are providing precision services and precision risk control so as to effectively solve the asymmetrical information distribution between us and our customers. And the quality of assets of our inclusive finance is also satisfying. Thank you.

Wu Gang: So in this conference, we have exchanged a lot. Due to time limits, we are open for one more question. And this question comes from the Beijing venue. In the middle, the lady in the first row.

Unidentified Analyst: Thank you for giving me this opportunity to ask the last question. I’m Ma Ming (ph) with Shanghai Securities News. So I want to know about the current demands of the private economy loans. And how can you increase your credit support for the private economy this year?

Unidentified Company Representative: Thank you for your question. And your question could be divided into two parts. And the first part is related to the loan demands or credit demands for the private economy. And if we look at 2023, I can give you some numbers. If we deduct the investment in the real estate development, the speed rate of the private investment is 9.2%. And the private investment growth rate in manufacturing infrastructure was 9.4% and 14.2%, respectively, and higher than other industries. So the government report this year has also put forward that we need to provide a level playing field for all the industries. So the private economy will be more confident and the expectation will also be optimistic. And the ABC will resolutely implement the strategies laid out by the central government. And in 2023, the balance of loans to the private enterprises was RMB5.5 trillion, an increase of RMB1.1 trillion by 25.6%, higher than the average level of various other loans according to the state administration of financial supervision. And the interest rate of the newly issued loans to the private enterprises. In terms of this, the interest rate is 3.06% down by 31 bps from the beginning of the year. If we exclude all the note financing, the figure would be 3.54% down by 1 bp. And the second part of your question is how can we increase our efforts to the private economy? In the first two months of this year, the newly issued loans to the private enterprises was close to RMB300 billion. And the growth rate is higher than the industry average. And there is one line from the work report this year saying that we need to increase the proportion of loans to private enterprises, which is definitely what we are doing now. And the growth rate of private enterprises, the loans of the private enterprises from our bank is higher than the average of the industry. So how can we support them? First of all, we will intensify our allocation of resources for private enterprises. And this year we will separately enlist our loan operation plan for private enterprises in our annual business plan. So as to guarantee the fund provided for the private enterprises and to make sure that the share of the loans for the private enterprises will continue to increase. Second, we need to highlight the focus of our services. We will support our private enterprises to deepen their, to identify, to launch more local products, products with local features. And to promote, to encourage them to improve their new productive forces and to go green and go low-carbon. And we will also provide financial support for those private enterprises to participate in the implementation of major products and technological transformation. And we also need to make innovation in terms of our product and services, especially providing greater services for industrial clusters and feature industrial parks and niche market. We will provide better, greater support for SMEs and optimize our loan portfolio, loan products matrix, both online and offline. We will also facilitate the convenience of loan issuance for private enterprises. And we will also continue to improve our long-term mechanism to encourage those private enterprises to be willing to apply for loans from us. And we will also have the due diligence exemption and the fault tolerance mechanism and to boost the enthusiasm of private enterprises to get loans from the ABC.

End of Q&A:

Unidentified Company Representative: (Interpreted) Thank you again for this question and also thank you again for coming. And here I would like to avail myself of this opportunity to express my gratitude to all of you. And today I know Hong Kong will have a holiday so I will not take up too much time of you. So that’s the end for this announcement. If you have further questions, please feel free to contact our investment team or our news team. Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Source Reference

Latest stories