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Edited Transcript of 601939.SS earnings conference call or presentation 29-Apr-20 8:00am GMT

Q1 2020 China Construction Bank Corp Earnings Call (Chinese, English)

Beijing May 15, 2020 (Thomson StreetEvents) -- Edited Transcript of China Construction Bank Corp earnings conference call or presentation Wednesday, April 29, 2020 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Guoli Tian

China Construction Bank Corporation - Chairman of the Board

* Yanmin Jin

China Construction Bank Corporation - Chief Risk Officer

* Zhiling Huang

China Construction Bank Corporation - Chief Economist

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Conference Call Participants

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* Jia Wei Lam

HSBC, Research Division - Analyst & Head of Greater China Banks Research

* Meizhi Yan

UBS Investment Bank, Research Division - MD & Head of Greater China Financials

* Ran Xu

Morgan Stanley, Research Division - MD

* Shuo Yang

Goldman Sachs Group Inc., Research Division - Research Analyst

* Yaoping Wang

China International Capital Corporation Limited, Research Division - Analyst

* Yi Wu

BofA Merrill Lynch, Research Division - Head of the Greater China Financial Institutions Research and Deputy Director of China Research

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Presentation

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Unidentified Company Representative, [1]

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Welcome you all to come to our communication meeting for the first quarter. We would also like to thank you all for your support and trust in us.

Yesterday, we have announced our Q1 results. And with the COVID-19 of this year, it has brought on very heavy impact on our economy. And for CCB, we implement the spirit by Chairman Ji, and work hard on prevention of the pandemic, well, as well as supporting the development of the economy, we utilize the technology as well as data economy and to help us with our businesses. And all our businesses have seen good results. And the critical results, you can see them from last night. I'm not going to go into details. This afternoon, we have our Chief Risk Officer, Mr. Jin Yanmin; as well as our representatives from credit, from risk management department, marketing, corporate banking, credit management, inclusive finance department, personal finance department, credit card center, financial markets department, group asset management department, et cetera. And we have all these representatives with us here this afternoon to answer your questions.

And in order to save time, we'll go into Q&A directly. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) We now welcome UBS, Yan Meizhi.

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Meizhi Yan, UBS Investment Bank, Research Division - MD & Head of Greater China Financials [2]

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I would also like to congratulate CCB on achieving a very robust and steady results in such a harsh environment. I'd like to ask 2 questions. And the first one is on asset quality. Another one is on NIM. In terms of asset quality, we can see that it is still very steady, very robust in terms of your NPL and provision, et cetera. Can you please tell us about in Q1, for example, how much of the loans, according to the policy, they could be restructured -- well, can be deferred, can be deferred to pay back? And is this a list of names that have been approved by you internally or the government has given you a guidance on which companies or enterprises could enjoy the benefits? And so far, is this going to be able to be deferred beyond 30th of June?

And now let's take a look at the quality, especially for retail. In your opinion, is it in Q2 that will become much better? And what is your expectation of asset quality? And when would the turning point show?

Second, on NIM. And we can see the NIM has dropped down slightly. And could you please tell us quarterly for the rest of this year, what is your view on this? And is this mainly going for the asset side or the liability side, which side is better than your expectation? And we can see that this is a small narrowing of the NIM. And is this better than your expectation?

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Yanmin Jin, China Construction Bank Corporation - Chief Risk Officer [3]

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Thank you very much for your questions. This is Jin Yanmin, the Chief Risk Officer. I'm going to first answer your question regarding the asset quality. This pandemic in terms of its impact on the banks -- commercial banks, it is huge. But we all know that for credit quality, when we look at them in terms of categories, there is a slight lagging effect. How should I answer this? Apart from those ones that advances that cannot be paid back or overdue, usually, we have requirements, for example, 30 days or 60 days, et cetera. So already, there is a lagging effect. And in Q1 in terms of our asset quality, there hasn't been much volatility. And second, for Q1, we have extended quite heavily, and this itself has a dilution effect on the NPL. So overall speaking, our asset quality remains stable. It does not mean that the stability is there to stay. In a later stage, it really depends on the impact of the pandemic, especially global pandemic impact, and whether the pandemic could go away and whether it could recover, and as well as the recovery plans from the government around the world, whether they can work or not. So there are a lot of uncertainties. So especially for Q2 and later quarters, I believe that this is a worsening trend. This is in terms of trends.

With respect to the specific implementations of policies, we have noticed that, globally speaking, all the regulatory -- regulations, apart from giving out stimulation packages, in terms of asset qualities, all the countries have requested for careful evaluation and look into those in detail. And the regulators in China, we also have such specific requirements, and such requirements and standards are very specific and clear. Especially for the small, medium and micro size enterprises, we have given them 3 to 6 months deferral in terms of repayment, and the arrangement roughly is in line with the other countries.

In terms of our implementation, we are implementing it closely. We are also negotiating and discussing with our customers thoroughly. Not only in that we implement the standards very carefully, we also discuss with them thoroughly. So you can see that we have some overdue loans increasing in Q1, and this is mainly for those who do not meet the standard. We have not extended that or deferred the repayment. And it is also possible that the regulators going forward, they may provide newer guidance, perhaps, for example, to further extend the deferral of payment. And it is possible that they might extend the repayment cycle. This is a possibility, and it is also a big possibility. Going forward, we will also implement according to these new guidance that will emerge later on.

In terms of retail, and again, this is mainly reflected on small and micro businesses, mainly for the micro businesses, and for the large-scale business, at the moment, we do not have much of deferred repayment plans in place. And for retail business, especially for Hubei region and for those who have participated in the fight against the pandemic and government employees, et cetera, mainly for this scale or this area of scope of people, so this is our arrangement for the retail. And the total volume is not very big. So overall speaking, it's mainly with the inclusive finance business as its core.

With respect to NIM, we will have our colleagues from the asset and liability department. I will quickly answer your question with respect to NIM. For CCB, we always highly value the management of NIM through our restructuring, through our pricing and focusing on the market competition and changing the trend, et cetera. For Q1, our NIM is 2.19%, down by 10 bps. Overall speaking, it is in line with our expectation. In our annual results announcement, we have discussed about this. And for the Q1, the year-on-year change of percentage is down by 0.1 percentage points for Q1, mainly comes from 2 parts. One is the competition for deposits and the change of the structure of deposit products and which has caused the change and made -- gave a negative percentage, a bit change in NIM. And in addition, we also have the changes going on in our business with our peers and in terms of some of the structural reasons and factors which also have had an impact on the NIM. Overall speaking, the fight for deposits and the downward trend of interest rate have had an impact on our business in terms of whether it is liability or asset side. And looking at the figures, the impact on liability side is slightly bigger. And for the whole year, our prediction is that because of the pandemic as well as the loosening measure of the whole international market, we believe that it is also possible that we will see further changes in terms of the interest rate. And we are predicting that the NIM for this year, going forward, we will face more pressure. At the moment, we continue to maintain our prediction of 10 bps decrease. Next question, please?

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Operator [4]

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We welcome Xu Ran from Morgan Stanley.

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Ran Xu, Morgan Stanley, Research Division - MD [5]

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Two questions from me. The first one on the asset growth. For Q1, asset growth is actually quite well and especially your business with your peers, and that is actually going quite well. And what is the reason for that?

And second, in terms of your loan ratio and what's the change going to be? And second, and if this is going very well and there will be a lot of usage of your capital, will this affect your changes in terms of your dividend payout, et cetera?

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Unidentified Company Representative, [6]

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Let me take the first one on the asset growth during the first quarter. In the first quarter, we have strengthened our asset to manage assets according to regulatory requirements. Our asset is at 6.58%, which is quite remarkable, mainly because of the great process, which (inaudible), and that includes our loans granted to people who need resources to prevent and control the epidemic. There is also some growth in investment. You were asking clear interbank lending, and that is very much in line with our arrangement of liquidity. There is much fluctuation in capital when it comes to liquidity. At the end of the quarter, we need to digest the overcapacity of capital in the end of the quarter. And that's my response in terms of asset. Thank you.

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Unidentified Company Representative, [7]

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Just to give a bit supplement. As for credit grade, in the annual results announcement, we made it clear that there will be an arrangement of RMB 1.5 trillion, which reflected tremendous growth compared with last year. As for capital, we have made a good preparation for that. The capital adequacy ratio will not be impacted with current measures. We will continue to keep up capital adequacy ratio at a rather high level. There is no big issue with capital. As for credit, the reason it growed so fast in first quarter is because, first of all, in Q4 last year, we were doing research on our business policies and our business expansion plan for Q1 this year. We made some special arrangement. The injection of liquidity was very much in Q1. That was because of infrastructure projects, including new infrastructure projects and other livelihood-related projects to stimulate national economy. The earlier you invest, the earlier you reap profit and the earlier you can get access to good projects. So that's why we've been preparing for that for a long time. And that was reflected in Q1 results. But it doesn't mean that the high growth in first quarter will have big impact on the overall credit for the whole year. We have a huge amount of loan soon expiring. If we invest as early as possible, we can adjust our credit and loan structure in the second half in a nimble way, but that was the arrangement we made without considering the epidemic. However, with the epidemic, we needed to follow the national -- the state governments' requirement in resuming work and other relevant measures in epidemic prevention control. At present, our loan customers, most of them have met our expectations. (inaudible), so we don't have to worry about that too much.

We were talking about interbank lending. The growth in interbank business was very much related to the growth of our debt in Q1, we had very ample deposit, and we have guaranteed liquidity from People's Bank. So that's why we have seen some growth in interbank lending.

When it comes to liquidity, it's guaranteed with very ample liquidity. Next question, please?

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Operator [8]

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Next question comes from Yang Shuo from Goldman Sachs.

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Shuo Yang, Goldman Sachs Group Inc., Research Division - Research Analyst [9]

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I just want to make some sense of assets and liability. Our NPL ratio is quite low in 2020. So in Q1, there were not very much underwriting of nonperforming assets in Q1. Will it happen in Q2 or 3? Will there be more underwriting as nonperforming assets in Q2 or Q3? What is the reasonable range of liability ratio from your point?

And I want to ask a question about commission rate and handling fees. I can see very good month-to-month growth in Q1, which supports your profit very much. So in terms of intermediate business, what's your take on that? What's your outlook when it comes to commission rate and handling fees?

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Unidentified Company Representative, [10]

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I'll take the first question. As our Chairman was saying, our asset quality is quite good. But faced with the global pandemic pressure, our asset is under great stress. The uncertainty in pandemic will lead to uncertainty in asset quality. In Q2 and Q3, Q2 especially, the pandemic will probably have more obvious impact on asset quality. We will consider some provision. There will be probably more provision compared with Q1. But overall, the provision coverage ratio will remain stable. We've been always very prudent when it comes to quality management. Provision coverage ratio will continue to be relatively stable. Thank you.

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Unidentified Company Representative, [11]

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As a supplement, as for NPL underwriting and disposal, due to the virus outbreak, asset quality will be under great pressure. There will be surely some growth in NPL ratio. And it's regarding how fast we can dispose of nonperforming assets, but it relates to our financial resources and how fast we can respond. In Q1, in disposal and underwriting, as you can see, there are more provisions and disposals across the board in banking industry in China. And that's mainly because of the concentrated disposal of nonperforming loans in medium- to small-sized banks in China. But as for the major commercial banks, the 6 major commercial banks, their disposal at NPL is relatively balanced. Apart from underwriting, of course, underwriting accounts for the biggest proportion, but due to the pandemic, we resort to different methods. For example, legal litigation, these measures are very much restricted because of the pandemic because we cannot conduct on-site due diligence. In the first quarter, the pace of disposal was slowing down. It slowed down compared with the last year. But after the pandemic, we were surely strengthening our assets to dispose of assets -- nonperforming assets. We are still moving our plan. We will watch for how the situation pans out, and we will make timely adjustment and arrangement.

As for commission rate, in the first quarter, we realized RMB 45.36 billion in commission income, which is quite remarkable growth, especially in difficult time. Our bank has been attaching great importance to handling fees and commissions. And we have been strengthening our assets to improve the business as part of capacity building. In Q1, the main sources of growth come from our key products because we know our customers' need very well. We have robust growth in the business of credit cards, and that drives digital innovation. We have maintained robust growth in digital banking as well. As for custody services, we've seen remarkable growth in commission as well. As for supplement, consultancy services, we've seen robust growth as well. So that led to overall good growth.

In the future, with great challenges against the growth in handling fees and commission this year, our consumption -- typical consumption will be constrained, which will impact our commission income. Second, because of the uncertainty of global pandemic, export financing trade settlement will be impacted. Third, due to the change in people's behavior in payment and consumption, we will have some challenges in expanding our business offline. So we will respond to these changes by addressing them with more digital services. We will strengthen our advantage in these services and just service and strategies in this product and address the challenges proactively to realize robust growth for the commission rate and handling fee for the whole year.

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Operator [12]

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Next question, Mr. Wang from CCIC (sic) [CICC].

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Yaoping Wang, China International Capital Corporation Limited, Research Division - Analyst [13]

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My name is Wang Yaoping from CCIC (sic) [CICC]. I have 2 questions. First, cost control. Second question is regarding fintech. In Q1, most of the major banks have done a good job in cost control. For example, your bank sees a decrease in expenses by 1%. So how did you achieve that in cost control? If we exclude some one-off impacts, for example, social insurance, you can defer that during the pandemic, and some expenses to develop businesses is deferred. So is it -- is there any possibility to reduce cost any further for the whole year?

My second question is, all the other banks are talking about more investment in technology because technology helps banks maintain very good productivity and interaction with customers during the pandemic. As for CCB, how do you see the role of fintech in supporting your business and business transformation? So as for your bank, when you are using technology, what differentiates you with other banks?

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Unidentified Company Representative, [14]

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Thank you for your question. I come from the finance and accounting department, and I take your first question. As you can see, for Q1, actually, for the past few years, CCB has used cost control as one of the aspects of our management indicators, and we continue to manage our cost diligently. From Q1, we can see, looking at the figure year-on-year, our operating expense is down by CNY 500 million. And as you have said, there are some specific reasons as well as some of the expected savings from our original plan. So in terms of our staff cost is down by almost CNY 200 million. And the main cost savings is that the government has given us some relief in terms of the insurance and security pension payout. And from this Q1, you can see that we have been able to reduce that by about CNY 800 million. And to continue going forward, without any change of government policies or adjustments, and I believe that this will be a continuous contributing factor. And in terms of the nonstaff cost, it has reduced by about CNY 330 million. And this has mainly come from our expected reasons, for example, some of our business expenses, which we have reduced. For example, we have some activities from our customers, and we -- through our cloud operation of our business and cloud running and as well as our IT cost, IT improvement is continuing at the moment. However, for our branches, in the initial 3 months, for example, our utility bills, our cost of people going on business trips, hotels, air tickets, et cetera. And these impact, there is a mismatch, and that has come -- that has shown some savings in expenses.

And for our next step for CCB, actually, for the whole bank, our cost control, we turn it into fixed cost. And fixed cost, this means that we have a fixed amount. And the second one is related to the changes of business. And as the business develops, and we look at how we need to save costs. And thirdly is our strategic cost. This is as what we have mentioned earlier for our strategic business, including ourself, for example, we have some forward-looking costs in terms of building of platforms and for CCB as a whole, for our customers and life scenarios and the building of different platforms and our rolling out fintech and technologies, et cetera. So all these, we would like to have a dynamic management process. So to increase our strategic cost, which can help us with our future business, and this is counted as our part of the investment.

And for 2020, the cost -- in terms of cost control, we also would like to hope through cost control. In the whole bank at the moment, we have also talked about lowering cost, improving efficiency, and we would like to see this through. We hope through management of cost, we would be able to reduce our administrative cost. By doing so, it would be able to help us realize our cost control targets as well as the further development of our business in the future to help us maintain our cost/income ratio.

Next question, we have our colleague, Mr. Liu, from our Fintech Innovation Committee.

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Unidentified Company Representative, [15]

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And through this pandemic, I believe everyone can see that actually, fintech is very important to our business. And right now, you can see that online banking and remote working is all very important. CCB for a long time, we pay great attention to fintech development. We have a top-class strategic development. And it means technology development, and we are promoting tech innovation. And for function, this word, it means that we promote empowerment. And P refers to platform. Through building of platforms, we would be able to build a biological environment for our users.

And in addition, we also have another concept which is helping our customers to build an inclusive environment. On one hand, we support the technology development. And on the other hand, it also helped to build a safe environment, a safe system to ensure the safe running of our business. Internally, we are also building smart working environment from supporting the one integration system to building smart running system, building a scenario-based new retail as well as building a seamless connection between our business and our corporate clients. Externally, we connect the B and C end and to build partnerships.

In terms of the differences between different banks, I believe that's what you focus on, perhaps would be about the building of the ecological environment. And for ABCD, the internal, that would be big data, AI, cloud computing, et cetera, and the utilization of such new technologies. Externally would be the building of the ecological environment. And surrounding the C end customers and then connect them with the B end and C end to resolve their issues through the building of such ecological environment, we can incorporate it into the social scenarios and to help us to further retain customers, attract customers and activate customers. And this would be something that going forward that all the banks will be focusing on going forward. This is my answer. Thank you.

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Operator [16]

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(Operator Instructions) We have Ms. Winnie Wu from Bank of America.

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Yi Wu, BofA Merrill Lynch, Research Division - Head of the Greater China Financial Institutions Research and Deputy Director of China Research [17]

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This is Winnie from Bank of America. I'd like to ask, for this year in terms of your loans this year, especially for the inclusive finance area, and we can see that the regulators have put this as an important part. And you are also focusing quite a lot on this part, and you are ahead of your peers in ramping in this area. And for Q2, we might see that not only because of the pandemic but also because of some of the demand shrinking -- shrinkage, as you might see some of the orders being canceled, so I'd like to ask for your inclusive finance. And what is your expansion target? And what is the rhythm? And will it be the same as last year, 60% growth? And if you continue at this rate, if we look at the 3 years and what will it account for in terms of your loans? And in terms of your collaterals, what are the requirements now? How do you ensure that with the fast development and serving the real economy, you would be able to control and maintain the asset quality?

Mr. Li, are you here, from inclusive finance department?

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Unidentified Company Representative, [18]

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I will answer this question. Yes, I'm here. Thank you for your attention for our business. And inclusive finance for this year from Q1, actually, we are able to keep a steady growth. By end of Q1, we have exceeded CNY 1 trillion. And for Q1, it has also grown by CNY 100 billion. And due to the pandemic impact, there are some key industries that we focus on. And we also look at the actual need of those enterprises, and we have specific strategies and we have come up a list. And this is also based on the requirement of the government. For example, for some of the enterprises, we need to give them some preferential policies in terms of the pricing. And in terms of various approval processes, we have opened up a green channel and to help them to go fast in terms of those plans being implemented. And for some of those small enterprises, which have been affected badly, we have considered and given them deferred repayment. For the micro business and some of the logistics business and food and beverage business, especially manufacturing business, for example, those who are manufacturing masks, we are supporting a lot of enterprises that we have provided them with capital support. We have seen good results. This is in line with the requirement of the regulators.

And in terms of our rhythm and our targets, at the moment, we are following the arrangement of our bank at the moment. For Q1, we support real economy. So we have about CNY 100 billion. That is within the plan, about 30%. The regulators have said that for the big banks, we need to have a growth of 30%. And we are also working on this, so basically [3 3 2] at this ratio or rhythm. And compared with last year for the same period, looking at the requirement from the regulators and overall speaking, we would like to keep a stable growth, and this would be in line with our 3-year strategy.

You have also mentioned just now in terms of the asset quality. As our director has mentioned, for CCB, our loan quality maintains the same, stable. And for inclusive finance department, it is the same. Again, we have made certain deferred repayment plans. For example, those which were about to expire by end of June or early July, and they have submitted submissions, and we also have opened up online green channels to carry out some of the extensions of repayments in about 6 months. This is what we have done. Right now, we have controllable risks, but we need to pay attention to it. For example, after the expansion of the deferment of repayment and what is their repayment capability, those are things that we need to continue to pay attention to. Thank you. Next question?

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Operator [19]

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Mr. Makin, please go ahead.

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Unidentified Analyst, [20]

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Thank you for this opportunity. I'd like to ask another follow-up question for asset quality. Since now you talked about, for example, retail or micro enterprises, and they might have some exposures. And for corporate banking, these big businesses, and if we look at the NPL, it separates them into corporate banking versus the micro and SMEs and -- or put them together, looking at different 2 parts of the business and what would the NPL be?

And second, I don't know if this question is a bit off, and I can see that in your financial report, your business with China Life is quite stable. However, looking at ICBC, it's not so stable. And so actually, ICBC's insurance business is in line with the market because this year, the insurance industry is not doing well. So I want to understand how come your insurance business was able to maintain a stable growth or a stable performance this year. Can you please elaborate?

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Unidentified Company Representative, [21]

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As to medium to big enterprises and retail enterprises in terms of asset quality, in Q1, in retail sector, the exposure was 70%. We will see high exposure with the pandemic going further. As for medium to big companies, the situation is stable. We are looking at stable situation in Q2 and Q3. In big companies, especially infrastructure companies, that is the bulk of our business. 1/3 of our business is in infrastructure and high-end manufacturing. I believe this sector will remain relatively stable. Traditional infrastructure and new infrastructure, high-end manufacturing will be stable. That's why we will see very steady growth in corporate business.

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Unidentified Analyst, [22]

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I'm sure you are following retail sector closely.

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Unidentified Company Representative, [23]

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Yes, that is what we've been doing. We are looking at how retail companies, SMEs change.

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Unidentified Company Representative, [24]

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As Mr. Li was saying, we are particularly interested in SMEs. We deferred some of their loan repayments, but we are tracking them closely. If we defer their loan payments but if they don't have any income, we downgraded them according to regulations. It's not just about loan repayment. If they don't have financial resource to repay loans, we have to downgrade them. So we really undertake pressure for that.

You're all asking about the structure of exposure. We will see how the pandemic turns out. If the pandemic will be under control, I'm sure more stability will be seen in this sector. If the pandemic goes worse, especially with uncertainty in foreign trade, SMEs and micro companies and retail sector will be under bigger pressure. Thank you.

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Unidentified Company Representative, [25]

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Life insurance is what you were asking about. You were asking about the difference compared with ICBC. Indeed, the difference comes from our difference in product structure. There are 2 main infrastructure products: one is lump-sum payment; the other, regular payment. And the other product is a quasi-wealth management product. Last year, ICBC, there are 3 CNY 30 billion to CNY 40 billion of insurance products. Before the new regulation came into effect, most of the products were not included. As for CCB loss insurance, we started to focus on regular premium product starting from last year. And that is what we've been focusing on. That's why last year and this year, we've seen some growth in the sales of this product.

You were asking about the difference between CCB and ICBC. I'm sure the difference comes from -- mainly comes from the difference in product structure. ICBC will focus on wealth management product this year. I think they will see a tremendous decrease in wealth management growth products, which will lead to the decrease in noninterest income. But in the meantime, noninterest income is on the rise, and other operation expenses are on the rise. Next question?

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Operator [26]

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(inaudible) from Jefferies.

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Unidentified Analyst, [27]

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I have a follow-up question on NIM and asset quality. As for NIM, the management said that the guideline would be 10% down from last year. In Q1, NIM was 2.19%, while 2.26% for the whole year. It doesn't mean that we will see a relatively stable NIM for Q2 and Q3. Can you please share with us the trend of deposit and loan in the coming few months?

I have a second question regarding asset quality. In Q1, many banks have seen a rather rapid increase in NPL due to credit card, consumer loans and mortgage loans. So I would like to know more about CCB in terms of NPL ratio in consumer loans and mortgage loans and what to take on the outlook in the coming few months.

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Unidentified Company Representative, [28]

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Let me explain our expectations for NIM a little bit. In Q1, there was a decrease of 10 basis points mainly because of deposit competition, which means 7%. And there is a trend going downwards when it comes to NIM overall in the market. But in the annual results announcement, our CFO said there will be a 10 basis point decrease for the whole year. The growth of assets in the first quarter was very fast. We're talking about CNY 900 billion for loans and CNY 1 trillion for deposits. So that had a big impact on NIM. We will strengthen our management going forward, and we will maintain the stable pricing structure and our control in asset liability. There will not be any remarkable decrease like that down the road. If we are talking about 2.26, 10 basis points down, which means 2.16. And there will be some slowing in the NIM in terms of month-on-month comparison.

I will ask Mr. Huang to answer your question regarding mortgage loans and consumer loans, and Mr. Zhang will answer the question about manufacturing.

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Zhiling Huang, China Construction Bank Corporation - Chief Economist [29]

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Let me take your question regarding mortgage and consumer loans. During the pandemic, our bank, according to the state policy, responded to the actual needs of our loan customers. The management has said that as for the medical staff, contributing to epidemic prevention and control, we can defer their consumer loans or credit card payment. In general, during the pandemic, the demand was affected remarkably in February in mortgage loan, but it rebounded in March. We have some experience in evaluating mortgage loans, so the quality is under control. We've maintained very steady and healthy growth in mortgage loan in first quarter. And the numbers just show that, the robust numbers. As for consumer loans, I'm sure that the pandemic will make a dent on consumption in the first quarter. If you look at the overall consumption in China, there is a 20% decrease. During the epidemic, consumer loans were on the rise. That was a new growth point. Therefore, we've been optimizing business process. We've been improving customer experience in consumer loans. So we can seize the opportunity of business which will rebound after the epidemic. So that's for consumer loans and mortgage.

As for credit cards, due to the pandemic, credit card business was affected in February because of people's inability to repay their bills. But I don't think the uncertainty will last for long. If you look at March, especially the end of March, the NPL in credit card business is at the same level of last year, and we were arguably doing the best among the peers. Next question?

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Operator [30]

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Next question comes from Lam Jia Wei in HSBC.

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Jia Wei Lam, HSBC, Research Division - Analyst & Head of Greater China Banks Research [31]

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From HSBC. I have 2 questions. First question is regarding repricing in the future. We learned that there will be more downward pressure in interest rate in banks. If we are talking about interbank lending and investment, will we see the repricing point come earlier or later? In the midterm, will there be part of the loans to be repriced in 2021, like mortgage loans? We are talking about 9.9% growth in corporate loans. But due to the pandemic impact, when it comes to where the loan is used, previously, maybe it was used for investment. But now will it be used for other purposes? How do we understand different types of loans? And how do we understand different targeting measures when it comes to risk control of this loan?

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Unidentified Company Representative, [32]

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I'll simply answer in terms of the asset repricing. In terms of the investment, we always focus on value investment. Our investment in terms of treasury bonds, local government bond actually takes up a relatively high percentage, and the duration thereof is relatively long. So in terms of incremental repricing, there is such a possibility. But overall speaking, we would be able to maintain the stability of our repricing. And in terms of the repricing of mortgage, and then depends on the PBOC from January 2020, all the new loans will need to be signed on the new policies and new regulations. And for all of these loans from August 1, they will need to be modified accordingly. So all the existing loans, by end of August, we will complete all the repricing of the mortgages. So the relative impact will also be reflected this year, and we do not need to wait until next year. In terms of the utilization of the corporate loans, and we have Mr. Tian to answer this question.

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Guoli Tian, China Construction Bank Corporation - Chairman of the Board [33]

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Sure. Let me talk about this part. Actually, we have already heard some of the basic background. And for Q1, actually, we are growing quite well. And this is mainly thanks to from last year for Q1 in terms of our preparation, and we have made some preparation already. And our overall credit growth is actually quite good. And we have also realized the effects that we wanted to see. In terms of the credit extension in the past, we are continuing the same scene, mainly in, for example, infrastructure, some strategic new industry, the upgrading of manufacturing business. These are all some of the credit expansion main industries, and they have not deferred much from the past. So from these perspectives, on one hand, we fully implement the policies from the government, for example, the resumption of work, et cetera, these new growth points. In the meantime, for our loan growth, we continue to adjust our credit structure and based on our existing policies and to fully implement them. Thank you.

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Unidentified Company Representative, [34]

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Due to time constraint, perhaps we invite one more question. Is that okay? We have our last investor, Mr. (inaudible) from (inaudible) Securities.

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Unidentified Analyst, [35]

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I'd like to ask about deposits. And I can see that in your annual report, you have also talked about this is about a growth of CNY 1.34 trillion. And for personal deposit, about a growth of CNY 1 trillion; and for corporate, about CNY 700 billion growth, so very good. And for corporate deposits, we can understand in terms of whether it is the credit expansion or some of the issuing of bonds, so we'll see a very high increase of corporate deposit. And for personal deposits, how come that has gone up quite a lot? Could you please help us understand this? And in terms of the whole year trend, what is the whole year trend for deposits?

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Unidentified Company Representative, [36]

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[Mr. Chen] from Personal Finance department. Okay?

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Unidentified Company Representative, [37]

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Well, I'll very briefly respond. And number one, for Q1, we have seen good growth of personal deposits. Main reason is that our bank, for the deposit business, we pay great attention to. For this year, we have launched a new project, which is a digital project, a digital running of the business. And this new project has contributed greatly to the growth of our personal deposits. Through this promotion activity and this activity, we have our digital service, digital marketing, another point.

In terms of our advantage when it comes to corporate banking as well as retail banking, we were able to combine them together, especially for Q1 in terms of, for example, the paying out of salaries, we have done very well. Through our digital running of the business in terms of building the platform and building the ecological system environment, it has shown great results as a consequence of what we have been doing. And second, in terms of the trend for rest of the year, next step, we will adhere to the digital operation of our business. And this is one of our new marketing strategies. And I believe that going forward, for the personal deposits, it is possible that we will encounter some external changes, for example, the capital market impact, et cetera. But overall speaking, I believe that our trend will be a stable one, and we will try our hardest to make sure that our personal deposit business is growing at a stable speed.

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Unidentified Company Representative, [38]

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Thank you very much. And since now I can see that there was one question about dividend, actually, for CCB. Last year, in 2019, our dividend payout policy, we have already mentioned, it will be kept at 30%. And for next step and for the Western banks, we have seen that some people -- some banks have stopped their dividend payout. And for Chinese banks at the moment, we are paying attention to the situation and development. At the moment, we have not made any adjustment to our dividend policy. So this is a once-off decline.

And this afternoon, due to time constraints, this is the end of our communication with everyone. Thank you, everyone. And we also would like to thank our colleagues from CCB. If you have any further questions, anything that you would like to further communicate with us, please get in touch with our Secretary and our Secretary of the Board, and their office will answer your questions. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]