Agricultural Bank of China Limited (OTCPK:ACGBY) Q2 2022 Earnings Conference Call August 29, 2022 5:00 AM ET
Company Participants
Han Guoqiang – Secretary of the Board of Directors
Conference Call Participants
Han Guoqiang
Ladies and gentlemen, good afternoon. I am Han Guoqiang, Secretary of the Board of Directors of Agricultural Bank of China ABC. So the wind is very core and the sky is very clear in this pictures, early autumn season. We are very pleased to hail the investors, journalists and analysts to attend 2022 Interim Results Announcement Conference of ABC. I would like to extend a warm welcome to all of you for your gracious present, and I would like to express my sincere gratitude to all the factors of the society for our long-term concern and support. Thank you.
Well, for this interim results announcement, we have Mr. Gus personally lead the senior management to attend the performance conference instead of desal online, telephone and off-line communication with the 3 in male. So this meeting would facilitate friends and investors both at home and abroad to have a full interaction. So now I would like to introduce the senior management representatives of Agricultural Bank of China, who attend the conference today. They are Mr. Guo, Chairman and Executive Director of Agricultural Bank of China; Zhang Xuguang, Executive Director and Vice President of Agricultural Bank of China; Lin Li, Executive Vice President; [indiscernible] will come to the conference by the telephone, Independent Director. And we have two parts today. The first part will be introduced by me about the operating results of H1 this year. The second round is interaction, responding to the concerns and the questions from the analysts and friends from the media.
Now let’s have the first session, I will introduce the operating results of ABC in H1. For H1 2022, ABC has confidentially implement this development of economy should be maintained while preventing and controlling a pandemic, we have made a progress of our own business, and we still have already got this resilient development of all the operations. The first is the efficiency has been maintained very stable. So we have CNY387 billion of the profit up by 5.9%. And for gross margin is up by 4.6%. And for net profit is up by 4.9%. And therefore, this investment return is 0.84%.
The second one is about the scale of our business is coming to another height. So the first is — our overall asset is over CNY32 billion, trillion and with $1.6 trillion of the newly issued loans and up by 9.6%. So for the deposit we have is INR26.3 trillion and increased by RMB2.7 trillion. So for goodness related deposit is reaching INR8.93 trillion for our deposits and the total amount is all taking a lead among the industry. And the second thing is finished.
The third is we focus on the new growth, but the newly issued loans are going through this major projects, screen development, technological innovation, key projects, et cetera. So for this project, loans is RMB474 billion. So for manufacturing industry loan is for RMB2.1 trillion, up by 24.5% for medium long term loan is up by 34.3%, signaled in industry. So for this green industry, it is reaching RMB2.37 trillion. So serving this small medium-sized business to making them benefit from here. We have RMB1.7 trillion issued to this small and medium-sized companies, and we actively reduced the payments and give our profit to the company. And with the impact of the pandemic, we have given the RMB2.5 trillion for the bond investment — we have reached a record high of this support for the local government, reaching EUR56.38 million.
So as this is a leading bank for rejuvenation of the rural area, we have increased RMB71 million. So for this increment and the proportion has all making a record high in the past 10 years. So this newly added one is $94.4 million. And for the set industry is up by 46%, helping the Chinese rural areas and farmers to have that. So we have RMB1.6 trillion for the loan and 160 country with this property listing key aspects and areas we have given them a huge amount of loans, and we have already been rated as excellent for that. The fifth one is we have implemented this overall quality of the loan. So compared with H1, we have about 0.02% of the bad loans. And we are alleviating the risk and preventing the risks from getting worse. So we also have this precaution method to coordinate the risk solving and protect the right of the house fires, and we have 5.37 systematic modules to have 100% coverage of all the high-risk assets and accident assets.
The next one, ABC will fully implement with the same console and the central government deployment to have the high-quality development. So that’s my overall introduction for each one’s operation.
Now, let’s come to this interaction session. I will first have this on-site interaction with online communication in the middle. We try to take care of all the friends and analysts present today, please only ask one question per person. And when you ask questions, please first introduce your name and the name of your Institute. So now we’ll start. We will have with us the first question. So what about we start from the one on my left. So this person.
First of all, on the left, so I am CCTV generalist coming to ask you something about the loan. So in July, we have seen a significant drop of the social financing. I want to know what is the situation of ABC. So it’s already coming to the end of August. So this information of July and August that have already been seen. So what about the H2 faster credit expansion? How do you maintain that one will have the answer — so before answering your questions, I will just say to all the friends from the media and all the analysts, I would like to say welcome, and thank you. It’s about more than 3 years. We haven’t got this kind of offline face-to-face communication. And because of pandemic control and prevention, a lot of friends who hope to come to our offline conference. They are still online. So no matter from online or off-line, I would like to say thank you I hope for this kind of method for the next about 1.5 hours, we could have a more in-depth and happy communication.
So let’s come to the CCTV journalist question for July with multiple factors, the social financing data has increased — has decreased greatly. And in July, for Agricultural Bank of China, we have still got very stable loan issuance. So according to the Central Bank data, we have about RMB168.1 billion, so compared with July last year. It is up by RMB37.8 billion. So you mentioned that July — compared with last July, we have got a big decline. However, from our own bank, our own data in July is actually increased a lot compared with that of last July.
So the second question you proposed is for the follow-up credit issuance and loan issuance, how would that be? So, I think this is a very important question for this macroeconomic operation and the operation of the bank for H2, it’s all very important. So, I would first talk about the conclusion. For July and August, we have already come to the 29th of August, and we can actually say that for our issuance of credit and loan for August, it will exceed that of last year’s data. So for single month loan issuance, they have all exceeded the same amount that it had in last year. So we still have 4 months ago for 2022 from September to December. We judge that this kind of credit increase, surpassing the amount Y-o-Y, we think it could probably be maintained for agriculture Bank of China, and this is our judgment.
And for September to December, our credit increase will exceed that of last year Probably, it could be maintained and why we are making the judgment like that. So I’ll first talk from our own bank. So for current credit reserves, we have already approved, but yet to be issued credit reserve we have done this analysis until the end of July for this 2 business loans have already been approved in CNR2.12 trillion. It is already being approved but not being issued. So compared with that of last July, it’s up by almost RMB300 billion. So until last week for this kind of reservation, it has up to RMB2.47 trillion, it is almost CNY800 billion higher than last year Y-o-Y.
And indeed, as I said, no matter is INR2.12 trillion or CNY2.47 trillion. They are not necessarily be issued. So maybe in the whole process, maybe they will just go to other different banks to have this final loans being collected and maybe not necessarily from our ABC, However, for to business credit reservation. I would like to say that compared with last year, we still have a quite stable reserve for that. And of course, for this kind of credit reserves, I would like to say that — this is like weaker than that. However, if we from the reserve aspect for this newly added one, it could make up for this decline one of this personal loan issuance. So this is from ABC’s perspective to do the analysis of our own credit reserves.
So the next thing is from this macroeconomic operations. Let’s talk about our own situation for this number disclosed on 12th of August, especially the speed of loans. It has already been lower than our expectations, as mentioned by the CCP journalist? So we can see from this data. Internally, we are actually in terms of the social finance loans increase, we are lower on a near basis. This ties us before now and its temporary July, we will be impacted by the increased amount of the royalty market from the mid-end long run, we can see that the economic growth need to have a transformation. So this is a transformative process. And we have a transformation from new N2O momentum, and this is not necessary to be very smooth. So the addition today would not necessarily safer the trends and only in July. And we still don’t have a solid infrastructure and it still takes some time to effect it more well, and we need to have a preparation [ph].
So Andy [ph], the actual work amount actually is under reservation. And we can see from the 1st July that the M2 growth as well as the deposit amount compared with last year growth hugely and all the that lines the course of the bank the deposits compared with the previous year. So this is a very good phenomenon. And later with the policy support, I believe that we will keep a stable growth — and the expectation of the real assets will be more stable. The urbanization process now had some slow down — so we hope that in the very long run in the future, we can take it step by step. And we will not have a large gap with very short period of time. And the dry situation actually, it doesn’t necessarily set for the future trend. With this on a weak expectation in prediction.
So, when we look at credit reserve for the back as well as our expectations and judgments for the macro economy, the coming situation as well as the future trend in July, August and the future quarters from September to December. Our gross amount actually has the trend to exceed and outperform that of the last year. That is my chance. So to put long short with the future, — now we will invest more on for interaction in terms of the reserves. We will focus on the following fields. Many several fields I’d like to mention to you.
First, we will further enlarge the investment of the credit and loans of the infrastructure projects and to further focus on the key projects of infostructure engineering. And second, we will also enlarge the percentage of county and city level loans. And thirdly, we will largely serve SMEs and micro economies and companies and focus on manufacturing industry and also support the essential housing mortgage ones in mat that’s my answer for this question. Thank you.
Thank you, Mr. Chairman, for your systems comprehensive answer on this question. That we would like to welcome the next participant to refer the questions. And the first gentlemen, and role page refusion — thank you for giving me this opportunity and ship analysts. And now we visioned we focus about the rest in elastic industry. So, I won’t know that for the exposure gap of ABC in terms of public housing reality loans, with the asset quality trend has the relate risk being fully reflected — and first of all, thank you for odor this question. And I think we all focus and pay attention to this, and ABC has always following on this concept that is royalty for bent papulation, — so it also decide on our loan policy, we need to meet a reasonable demand of roast industry to support the virtual circulation.
And we also — this year, this amount of TRY2.9 billion with a growth rate of 1.49%. In the first half, we placed about 100 billing and CNY110 billion with a fast growth rate and actually, with this pressure in the additive amount loans and the balance is about CNY30 billion growth by JPY5.3 billion growth by 3.90.58% compared with the previous year. And for some companies expand very fast, we have also the risk of fast expansion, and we can see that residue and balance is not very sufficient, but we have the risk under control.
The second half APC will follow the deployment of specific cancer as well as into to stick to the focus on the business development and stability of credit assets, we will spread enlarge the financing and operating [indiscernible] make sure the stability and smoothness of bond-raising in real estate industry to supply the reasonable country requirements of all kinds of routers and reality industry. And for raw materials, we need to focus on the livelihood features and to focus on the public projects. And on other hand, we need to further enhance the risk control capability to avoid the prevent the risk and the loan one stop it or method to all the companies.
And second, we need to enhance monitoring of the risk to further have the whole process risk control and prevention and to also try to mitigate the rest in this industry. And with MA and other financial methods, we will work with the local government to provide a good approach in terms of financial services.
And if we would like to welcome the next participant to quest. What about the gentleman speaking in the last row in the middle. Okay. Thank you for giving me this opportunity. I’m in and also analysts. And we noticed that we also encourage the fact, especially in large bags. In Q1, ABC had let poor performance. So what’s the future prospects of your back in future?
And thank you for your questions. I will try my best rates the mission requirements and just being attached with the importance from the APC and we make conditions to the real economy to reduce the tax and to we hope to improve the stability and the provision coverage is 300% and dropped by 2.2% compared with last year comparison beginning of this year is 1% higher. So this is the change you just observed. Actually, in the future, what about the policy of the provision? And I think you are all concerned about this question because it’s highly related to your profitability as was — and for the provision policies, I think it includes 2 aspects actually.
On one hand, it’s about the amount as the added part, the second is about the release of the reserve and actually the provisional rate is decided by this. And by these 2 assets to the future, the provision policy actually can be analyzed in these 2 assets, first and so about the newly added one and upgraded. And for this part, we would like to take a prudent attitude in the principle. According to the accounting standard and the literature to apply freight. And this is the bit of regulation requirements as well as content center. And second aspect, it’s about the reserved part. And what’s our policy about this?
We will base on the requirements and demand of management to reasonably release the provision reserve and those we can only support the developments of the real economy. But also on the other hand, support the investors ROI to make sure the ROI can be remained at a relatively stable level — and this is about the next debt provision coverage. This is the words I would like to share with you. Overall speaking, the provision coverage provision coverage will continue to drop step by in the future period this time and this is impacted by the 2 assets. So what level it will drop to it depends on the operations, the situation of the macroeconomic development. And just now we talk about the release of the reserve and it’s actually based on the demand of a prudent macro management.
So today, I would like to also take out to share with you about the follow-up question that is about the valuation of the bags. And just now for the question Actually, it’s tiny related to the evaluation from valuation of the market back. I think it’s under-evaluated and estimated assistance to be a mistake that is the provision policy. We talk about the macro prudent attitude as far as Superior Article management. This is actually seems to be contradictory with the market operation policy. And I know that maybe you’ve done some research on this aspect in MS.
I think that for some analysts in China, the box, do you need to be subject to these assets — so it’s very hard to conduct the marketing-oriented valuation towards China back, which results to the undervaluation. So I think this is actually a misunderstanding. Now in market. If we look at the situation in the whole world, we have a more clear picture. Any back actually the — our special companies, they actually had the function of really to mitigate the risk and remain the stability of the macro economy. So we’ll have an economic downturn where we create loans. This is not a tie method. And if we have a good macroeconomic development so prudent attitude at cannot necessarily gather results.
So, I think that we need to have a more holistic view towards this. So, I’d like to also pull for all analysts and friends, as well from press to make more interpretations and to have more process interpretation in this regard. In this way, the operation and the regulation concepts of tea actually are aligned in the whole world. This is actually the attitude and the way of working of the holdbacks as well. This is why I would use this question to say something about this value assessment for the bank. So hope that you could make a positive one of this value assessment for Chinese banks in so much for President’s professional ones.
So we will see this opportunity to the middle section. So the gentleman has decided in the middle section. Thank you so much for giving me this question. I would like to ask a question about the mortgage loan from CCIP, — you can see that for the overall mortgage loans is generally weak this year. So what is the situation of CC — the first one, what is the newly issued mortgage loans? And secondly, is the early repayment. What is the influence? And then what is the newly issued loan and for the guarantee of this home delivery? What is the situation? And please, also look forward to this H2 situation. But really, this is to question, and Mr. Ling is responsible for this. And I’d like Lin to answer the question.
Thank you so much for the question. So since Q4 2021, ABC has conscientiously implemented with regulations or requirements to have this reserve cycle and the cost an adjustment to actively support the user demand for home purchase. I have to say that personal mortgage we have already maintained a quite stable development. So H1, we have 13.8 billion and net increases of 102.5%, taking 62%. And for this business development process, we can carefully implement with the reduction of the payment and share the profit with the dividend. So for H1, well issue the mortgage loan rate compared to last year, it is down by 20 I have to say that this is the overall business development situation in work. We also have a very depth understanding for personal mortgage loans. On the one hand, it is related to all the different families.
Second is also related to the healthy development of the severity market. And later, we also will increase the integration of mortgage, and we also further enhanced the investment of this mortgage. The first one is we actively connect with this good high-quality brokers for secondhand homes and then to have this business reserve for that. And the second is actively participate in this innovation. And we are — still have some key projects being researched. And according to this promote new projects where we develop that in a mature way. And the next thing is implement this optimization of this credit insurance policy. So here, we have already done a huge amount of work, including to simplify this application document to adjust the threshold of the customer and to improve this approval efficiency for to expand the technological support to atom this IT system construction to have to the overall management and marketing confidence to better sell with the home mortgage customers to have this technological empowerment.
So for this preposition the one — and we have to say that we will just take this building guarantee. And this is very important. I have to say that we have to have a very clear judgment and we need to balance all the different parts of the relationship and clear about this a reasonable support and comprehensively improve this guarantee of this home delivery, so for risks of this delivery. We have 1,112. And therefore, the high-risk loan amount to CNY12.3 billion, taking the whole proportion of 0.03%. So now we have already 746 projects being included in the local government guarantee of the delivery. And now 60 projects have already got the condition of being able to be delivered. And for a small amount of residents choosing to repay the mortgage at an earlier way is actually based on their own financial planning. And it also has something to do with the current declining profit of this wealth management.
And for this aspect, we have to stick to customer-centric to give them convenience policy of the early repayments and exam the default payments. And based on this big wealth management system to target the service given through this mortgage customers to satisfy the customers managing their wealth, and that’s all for me to answer that — so thank you so much.
So thank you so much, and I am Huya [ph]. We all know that for ABC is in a leading position in the same trade in terms of the live customers on this mobile app. And in terms of customer conversion, what measures have been taken to convert from MAU to AUM, but what is the current effect?
And the next step, how ABC is planning to follow the trend of digitalization and make more services from offline to online to reduce this service cost. Thank you — so I understand there are 3 parts of your questions. And the first one is about the development and the growth of this mobile F and second is the conversion. And the last is how to reduce the cost and do that — so we can see that for mobile app is the major interface of all the different players. So we are using entire ADC power to develop our mobile app. And till the end of June, we have registered 434 million cardholders. And for this announce activity is 164 cloud holders and it’s up by 11.7 million. So for this increment or the total amount of all coatings. So this is having an absolute leadership.
And this is what we are expanding for our leadership — and the second question is AUM and MAU conversion, how do we view that? Actually — so for AUM, with a bigger amount and MAU will also be bigger with — I mean, you being you could have this better AUM. So it’s hard to understand that 1% having no money in the bank and then their mobile app is action, which is like we think that we have the traffic to develop the product and with development to have that. And the thing we do recently is surrounding with the overall customer journey to constantly optimize with the key business. And we can say that for this key business point, we could have even more than 10 different kinds of this optimization for this mobile functionality. And this is easier for the users, we can clearly see that — so we can see that for ABC for growth is actually very big and is personally like with more than 5 digit growth. And the looting is for certain customers for product portfolio, we have done this country version.
We have this medical insurance section and car driver section to help these customers easily locate what they need. So with all those measures — our monthly active user for our AUM is higher than MAUs ones. So we can see that it’s up about 5.6%. That is to say that our development is high speed and high quality. This is what I want to answer you. And the third thing is how to lower the cost. First, how to understand this question I would like to give you a number for until June, our daily activity is over 28 million cardholders, and we have about 2,000 offline side. So if without this mobile app, if they go to every line service points. It will be over 2,000 people per site.
So on average, now it’s about 70 to 80 visitors and we come to the offline side, it will be like quite average, quite normal. And we keep over 300 quarters coming there, we will have some pain. So that is to say that for our fixed costs and for their efficiency has already been utilized. And this is what I want to say without the mobile app, it’s impossible for us to have still many customers being solved in highly in a high-quality way. And this is the first one I want to answer. The second thing is for our purpose, it’s not necessarily like lower the cost — so lowering the cost is like the permanent target as a listed company. However, we have to balance the service. It’s not just like making all the people to chase to the online want to lower the cost. We try to do the synergy of online and off-line and to give the best quality line.
And we can also say that for some special people, they also will do the services to offline. This is like Fulton off-line advantages. I don’t know whether I’ve answered your question or not. Thank you so much. So we will carry on mature session. So, we will stay line flow of that section, okay?
Thank you very much for giving me this opportunity. I am from PICC and Media. I would like to ask a question is about this interest rate gap. So what is the reason why we have like a lower interest gap. And I want to know that what are the prospects of this interest gap in H2 and how do you stabilize that — thank you so much for the question. And I say that for the management of this interest gap is a very important policy for us to manage our bank. And we can see the net interest rate differential actually dropped compared to previous year. And we can see that we are to the industrial trend and the conversion have different reasons to analyze the major reason of this is because in our back, we actually largely improved the green development from scientific technological innovation and include the ins and conduct a lot of projects from January to the in the company, the loan growth by.
So actually, we also have the interest rate cut. And I’d like to see that also we have decreased the net interest margin but are back actually in the first half — in the first half, the interest rates and net margins growth is over 6% and the scope for the same period of last year. So this is the current situation of the net interest margin management. And what do we look at the future trend about the interest — net interest margin? And I think that — we will see that in asset side will continue to deposition to the real economy. And then there will be a drop to some accident. And last year, in last June, the deposit interest rate reform as well as this January above the marketization of the post interest rates, and we continue to optimize the population and to mitigate the cost increasing pressure. And now the individual deposit is about DK14 trillion, and this is actually the maximum amount all the back — and this will actually be a very important clarity for the stabilization of the net interest margin.
On the other hand, we continue to further enhance the innovation and to Porto in large the own stream to the spa industries to support them, and we will also petition to mitigate the pressure of the loan interest rate drop during the second half of the year. The net interest margin of our bank will be actually drop a little bit, but overall speaking keep a stable way. This is a trend of next half, and we follow the deployment of the CPC Central Committee Council. — and we will continue to also give further concessions to support the real economy and to remain a dynamic data of different business and to further improve the efficiency and we will focus on the work of the aggregate structure as well as the quality, et cetera, to keep a good balance in the second half.
We will also enlarge the investment to support and meet the requirements of the real economy and regularly continue to improve the capability of customer acquisition to keep a first stability and the growth of the profit. And we also consider the original and industrial customers different, and we’ll continue to have the comprehensive management towards the restructuring. We will stabilize the data for interest margin. And we will also have the management and to have the interest rate management strategy, et cetera, and to have differentiated pricing to further enhance the service to the customer. And this we can actually mitigate the risk for interest drop. So we have confidence to guarantee the stability.
Okay. Thank you. Now we’ll continue with the next question lady from the listed role, please refer for questions.
I’m from News Agency, forecast data of the first half of the NPL as well as the overdue as drop and now due to cover the market association, how do you look at the NPL pressure? And in what ways will you offset and stabilize the development — and thank you for your concern of the data. And I think that actually, there are a lot of impacts of the macro economy, which also caused some pressure of the asset quality. This is actually issue we’re all confronted with. And we highly attention to these issues. And we also introduced some detail.
Now, I will give you more detail to share with you our results of versus about asset quality, capital stable by the end of June APL is about billion growth by JPY1.8 billion and compared with last year for 0.02%. And first half, the NPL dropped by 5.7 and due to is about CNY18 billion and over durative 1% and drove 18% compared with the beginning of the year. And on the beginning, beginning of the year, the also stock by 0.4%, and we have also a very good asset quality — so for the loan NPL, we have very stringent saner — and for the loans overdue for overnight days, it’s included into the nonperforming loans. And this postage attracted dropped largely compared to the previous year. So, it can be we have a very strong risk mitigation and the resistance. And due to the pandemic, many industries have been impacted largely for the — cater industry as well as the SMEs and the microeconomics we also see well pressures and we have the pressure of overdue to nonperforming loans; and this will also impact the asset quality.
So [indiscernible] company to have dynamic monitoring as well as the pressure test of this company to control all risk. And then net debt, ABC will have a implementation of our philosophy to perform just duty of our back to keep the stability of the market and to also increase the risk potential and total measures. — to further optimize the NPL to put more sources in rural revitalization, SME as well as green financing, et cetera. Second is we will have a coordinated development to further have a continuous plan of risk control to also hesitation to avoid and ask what the threshold of the risk and also to build the capability, especially the digitalization and to leverage business with technology to identify the risks and to support the sons and the stability of our credit work. Let’s continue with the next question.
The management team and [indiscernible]. I’ll talk to you about the question as the driver of profitability of the first half. And now we have more risk to how do you predict the predictability growth rate of the second half. And I would like to let Li take this question.
In the first half, the overall driver of the profitability of the first half, the are several drivers. First is about we actually have a very good synergy with the real economy. And we now that we have a relationship with consistence with the real economy, and we give more profit and concessions to the real economy to supply income and revenue and growth. And just now, our person also talked about this as period questions and coverage about the project assets. For the first half, we have to give more concessions to the economy. The newly issued loans. The interest rates dropped, it’s actually outperformed the drop of the LPR.
So by reducing the fundraising cost for economy to expand the vision demand in the first half, the predicted asset scale growth by at 10.8% compared with the previous year and also revenue growth by 5.9% and the interest rate drop actually outperforming drop-off, so it gives rod-concessions [ph] to the economy. And we also penetrate the demand potential and our revenue grew by 5.9% on a year-on-year basis. This is the first point? And secondly, speaks about the asset quality, which is kept stable. And just so gene news agency asked about the question of asset quality, which this question has already been answered.
And in terms of the quality, asset quality, we achieved a good result cash to the improvement of the management holding it cannot be achieved without the macro policy support to rate and the market entity. It’s highly relevant. In the first half, we had some challenging macroeconomy. I know you’ve all noticed about the physical policy and monetary policy, which actually further have the potential and first to make sure help the market entities to have a sustainable development to solarize the patent has of the macro economy is laid a solid foundation. And for that and the current — the large amounts of market entity can be protected and just largely mitigate the pressure of the back.
And in terms of the asset quality in the first half, the back came stable. And this is about the profitability in second driver of the profitability. And thirdly, we also mentioned previously about the accumulation or stage. The provision reserves have been released continuously. And in the earlier stage, we are communicate a large amount of as residues. And when at the most [indiscernible] with most emergent need, we already and periodically release the residue and balance to promote the stable growth of the processability. This is also another driver. And so you asked other questions. The second part of your question is about the profitability prospects during the second half. I think that we are very confident towards Chinese economy. We think that we have a right potato developments in the future.
So, I believe in the second half, our best profitability will keep stable growth, and we are confident to give a quality, high-quality questionnaire to our masters and customers. And we are truly confident that in the [indiscernible] economy is very promising, and we will also witness some on creation in terms of the data, actually, because this is actually to do some punctuations. And in the second half with the implementation of multiple policies, I believe that the domestic economy will grow and turn to a more stable development. The second thing I want to say that from ABC’s own characteristics, we are, we are a light of and that could fight with uncertainty and challenges.
Why do I say that? Because ABC is crossing cities and county level and villages, 50% of our presence is rural 50% is in the urban area. This is the unique characteristic of ABC. — with this kind of future is making, we will have a deep promote when we are faced with the uncertainties. So recently, we have proposed that for our positioning, our strategy and we have positioned ourselves with 2 different aspects to develop the One leg is trying to serving this rural rejuvenation. One is serving with a solid economy. So we really stress this rural area and the digital economy, in the green finance. So for country level and rural area, we placed it as a very important aspect.
And for the credit demand, the overall compete speaking or weaker situation, I have to say that for our comp level layout and our customer base, it has given us a great support. I have several data to share with you to prove that for this overall credit structure of ABC, you can see our interim report for our comp level loan, it takes about 37.5% of our entire loan bank-wide in H1 this year for our key aspect for the increment of our country level loan increase, it takes about 50% of that. For example, our wily preferential loan, it takes — about 50% of the entire bank-wide issuance, for example, infrastructure loans is also 50%. And for our green finance or company level, it to 47%. For manufacturing industry, county level takes 43%. And for personal loan, or country level, we take 62%.
I say all of the — is that for ABC, it covers the lower area and the other area, we are more resilient. And the third confidence is we have this digitalized restructuring and transformation, and it has made our internal management level has been significantly in a matter of internal marketing and risk management. For example, for each line for our online loans already RMB2.7 trillion, and the growth rate is 7.3%. We’re constantly upgrading the risk recognition and there was a very diversified pre-warning and monitoring model to improve the financial risk management for convenience, semi, time line and sectors, which is also why we say that for H1 for our entire low quality with such uncertainties, we still could maintain quite good distribution. This is our internal management level improvement. It’s also the environment of debt.
And lastly, I would like to say that for our — we have this provision coverage is very good, and they’ve made a very good foundation for our orderly development afterwards. So that’s my answer for the future ABC development and stable risk to have this portable return to the investors who are still very confident. — for question. Thank you so much for present for their in-depth and careful interpretation — thank you. We now welcome the next question. We will still give the question to the one on the left. So, the gentleman over there in the last section.
Thank you so much management team. I am from 21st Economic News. This year, the market fluctuates quickly and many wealth management products actually making a loss. So how can be set wealth management benefit your customers? And previously, we have already got this first-ever age pension, wealth management and how ABC can see the opportunity for pension and finance. Thank you so much — thank you so much for the question. I would like to talk the 21st century for your concern of our ABCs Wealth Management. Our wealth management call establishing August of 2009.
In the last 3 years, we have already got this technological transformation. I have to say that we have already taken a very firm steps. H1 this year, we can see that RMB2.13 trillion we have already maintained the cardholders’ Wealth Management to 1.08 million. So I have to say that it has already become the absolute key aspects. But currently, we can say that it’s already reaching 46% or country level holders at the end of June 2022. We have 2.9% of the interest rates. We go by 19 of last year. So this is a 10th a 5-year national debt. So here, we have already delivered to our customers at RMB24.9 billion. So for the cash management products have already delivered RMB11.9 billion.
So for this opening session, we have already delivered about RMB14 billion. So we see that for the scale of the business and the efficiency of them, we all have maintained a certain effect. I have to say that for this national debt fluctuation, we have already reached this — the loss of our wealth management products have all maintained as the lowest one in the industry. So we could actually maintain this dynamic balance and we really could build a very good moat and protect that. So the work should be attributed to 3 aspects. The first one is with all efforts to create this market leadership in industrial investment and research, I have to say that the investment research is the most important competitiveness of our bank. And we say that we have to do 3 more here.
The first one is more professional and with our integrated team construction to have this macro policy, macroeconomic situation judgment and analysis and for our policy structure and the product functionality we have to depot ourselves. The second thing is extensively visit the customers and the study and research markets to closely focus on the customer demand. And we will just improve this revolution. So the third is to have a more precise strengthening of this technological one. So we will just offer more comprehensive and more ready data support. So this is the several aspects that we have.
The first one is to have more scientific management and how do we better faced with market changes. So with the practices, we have already explored some effective methods. So we have concluded them as 4 in systems. The first one to this absolute interest, absolute interest and profit. So as our target. The second system is to have this prewarning as the main characteristics to manage that. The further to have this resilience of our asset arrangement. The fourth one to insist on this priority investments. So with our practice was the 4 systems, we could better create with a positive wealth management revenue. So the last one is to always speak to this prudent presence. So we believe that the risk control is our bottom line and which management is also our profit.
So we first create this whole process embedded risk management system with our bank characteristics. The first one is to have this close management of the risk. And we also could have this product risk recognition. And we also could say that for our investment, we could look back and we can see that every year, we will do this certain arrangement. So the next thing is to focus on Michael, what we have made and to strengthen with penetrated management to make sure that all the risks could all be covered by us. And the last thing is about this asset capitalization. So we can see that we don’t have any bad ones and we also could have with better operation.
So for this, we could have this pressure test, periodical and non-periodical ones then to have the warning and to have this bottom line being safeguarded for our customers. I have to say for the investment team, I will say that for professionalism and professional skills, we really recognize their professionalism. The next step is we will stick to this being professional and with the professionalism to protect our core business and investment portfolio, including this integrated resources and scientific allocation of the assets and patiently company, the customer, and we would hope to remain calm when the market is booming. And when the market is being very low, we will also try to become.
So, we hope that we’ve used our attitude of serving the customers to benefit all the customers to fasten with the high-quality development with our fee contribution. So for the pension, wealth management and the pension financing, as you mentioned, I really agree with that. And we just say that this is like the vast and the broad side. So we had a huge space. until the end of 2021 for our pension financing it has about 67%, 29% and 4%. And we can see that with the fastening of aging society, we need to strengthen the third aspect of our pension financing is, I have to say that you will cover billions of Chinese people’s pension requirements.
So for ABC, we have to use our solid and professional service to transfer it into this great development. So of all go in Bedinan Chongqing [ph], the 10 pilot cities, we have proposed the first batch of the pension wealth management product. Before coming here, I have already checked that 10 days, the sales scale is already reaching BRL 8 million. So we expect that the next year, it will all be sold out. So after 10 days, we have this huge amount of sales. I would like to say that the customers are really agreeing with this — to conclude for the pension finance. We have some featured a first business stability and long-term investments.
And second, we actually want to more have stabilized the investment and to further do the inclusive pension finance — and here, we actually created 50 as a first target for the operation of this product for in boxes because due to some issues, for example, the difficulties for the wealth management product of the people. We have some there conditions. And now we have 8.6 million dual customers and on production and now for pension carditis about over 2.7 million and over JPY17.5 trillion overall. So for the senior finance service, actually, it’s very important for us, and it’s also our responsibility to serve people and serve the age and will continue with this work. Thank you.
Thank you for your answer. And next, we would like to leave discussion for the participants who are joining us from online. And we selected and collected the questions with investors joining us online. So we would like to select the questions that we are all concerned but have been addressing the previous part. So I’d like to read out this question. This question is related to the inclusive finance.
And over the past 2 years, the inclusive finance business grew very fast. Now the percentage is about 10% and the cost number is over $2 million. So I’d like to ask how to optimize the account opening service for SMEs and micro companies and how to leverage technology to have a high-quality development bank inclusive business.
Okay. Before I answer this question, I’d like to first give you a report about our performance. So you can have a more good impression of our business in this regard. For us, for SMEs and micro companies basis about INR1.7 trillion and growth by 300 selling, and we have about 2 points of order 2.4 million accounts growth by about 450 500,000, and the NPL was controlled in a reasonable level and to largely lower the cost and control the risk. And for the NPL, we also improved a lot, and it’s been achieved by 2 aspects. And just now the question also asked how to optimize account opening service for small mass micro companies. We actually have a technology leveraging this with RPA technology as well as electronic belies to optimize this process. For PARP is the set of software. So you can actually have all the transactions of the customer connected, so the data can be streamlined and after is using technology, the average account for opening time the industry average is about 3 days, working days, but we can reduce that by 1 working day.
And it’s confirmed to the principle for SMEs confirmed to the requirements of Central Bank, we can actually open an account with the only 1 day. And this we will largely improve the service and efficiency in the second is about how to leverage the technology to put a high product development. And I’d like to answer this question in 3 aspects.
The first one. Lastly, innovate the product with enriched product to sacrify the diversified concrete requirements of the small customers. And for example, to first accomplish the system and to optimize the categorization, products, novation mechanism and to provide online service customized service as far as tech service, credit and product and service and also to leave the advantage of ABC to have the synergy of online — offside. And for ABC, the biggest advantage for us is about offline, we have about 23,000 outlets online, we also have a comprehensive network. So it’s actually a very strong network resources and customer resources. The online and off-line synergy will be the next target of our work to a mainly push the inclusive on to act the leverage our network and online energy to penetrate we include the bins to reach to more customers. This is the second aspect.
And third, we need to use the technology in power to improve the management capabilities or aspects to share with you versus to have more technologies lower costs, improve the efficiency and secondly, with the digitalization technology, we can have the accurate customer acquisition and customer identification to lower costs. And thirdly, to detrition technology to control the rest which to lower the cost and the risk of inclusive finance loans. And therefore, from an answer for that content. Thank you very much.
Okay. Thank you for a comprehensive answer of this quarter. And the next, we will continue with the on-site question. And the lady in the first row as right, please question. Thank you, dear leaders. I’m Leit [ph] from Securities. I’d like to first ask a question about the credit issue. And in the first half, we can see the weak requirements of the Relance industry ABC in the first half to have a strong performance in this regard and compared with the last year, the growth reached 19.5%. So my question is what still credit growth offset the gap of float industry? And what’s the issuing Pena for the second half? And what is the target industry. And actually, this question is very similar to highly relevant with the questions from the CCTV is I’d like to talk about the details of our development and what aspects to offset the GAAP assets.
Firstly, I’d like to see about the cantilever. And in country level, we have a fast growth in the first half, the growth contributed to nearly 0.5%, half of the additive is about 30% of the reserve by 7% to 37% active in reaching nearly 50% and the balance of content labels is about CNY2.9 trillion and growth by JPY3 million, $70 million, and the postage reached a core high over the past decade. This is the highest in the past decade. And for the farmers loans balance, exceed 750 billion. So on second hand, we improved the efficient investment and larger work on this. And in terms of the infrastructure investment balance, Zabala has reached about INR4.13 trillion. This is not to be actually the major aspects of our business. But in this year, in terms of the infrastructure construction, we also enlarged our issuing to largely support and expand the efficiency vestment and on, the financial tool, we have about JPY300 billion and of the national development bank, which is different from that of the commercial bank. And in Grawe [ph] issued loans of $1.3 200 million to a highway project in Titan this is actually a supportive front raising of another project, and this was done by the agriculture back of China Dejana [ph] in July 31. And for the pet amount, now it’s over 110 billion get approved and were already covered the 25 projects as was the issuing of Phase 5 selling — and this is about infrastructure construction.
The next one is about the inclusive finance for the small and micro companies and which we realized faster growth. And the balance is about JPY1.7 trillion growth by CNY370 billion compared to the beginning of the year with a growth rate of 28.4%. Transit attitude for Malta was growing speed actually taken through the and for inclusive finance, we actually compare with the revenue of the year is grow by 15 50 trillion. We made a lot of improvement to degree technologies to make sure the additive amount is taking the lead for the first half. And this is a third field, the first year is out the high-quality development transformation of the economy. For example, the green credit, the emerging strategic emerging industries, the manufacturing industry. And for manufacturing industry, the data breaks through DKK 2.1 trillion, and the newly increased is about THB 40 billion with a gross rate of 24.5%, among which the mid- and long-term loan growth by 34%. — the green credit balance is about INR2.37 trillion compared to the beginning of the year to grow by 20.1%. And so strategic emerging industries low balance reached JPY1.1 trillion compared to employers growth by 29.2%.
So you can see in this field, the growth rate of the loans in this field exceeded 20%. And including the compiler loans, we have very optimized growth rate and it offset the other aspect. We will look into the future for the second half. We will not see our policy. In the second half, we will continue to focus and push this industry to work all around way to support the real economy to split the development to provide a robust financial survey. And thank you for your questions. And thank you, Chairman, for your answer about those strategies and the tactics. And in today’s meeting, we see us very inspiring, very comprehensive, and we are reaching to the end of this event. So we will have only one question. Now this middle [ph] region, please do several questions.
Thank you, moderator. I’m the journalist from on — and I’d like to also ask a question about the Green Finance. So the question is, you mentioned about the growth rate of 20% in the green credit. So what’s the highlight of our performance. And all now, the bars is about JPY2.37 trillion. What’s the quality of the green credit and green loans? And what’s the early aching target and which are the major areas of issuing compared with the rest of common products, what’s the difference of screen load? And what’s the criteria to select the customer of green credit with a credit reserve situation. I have to say that this is like a large scale of extreme climate and changeable climate. This is like the heated question.
I would like to have President [ph], who is responsible of this aspect, we would like to have Tim to answer this question. Thank you so much and from Hong Kong, very honored to answer the last question. This is closely related to the positioning of ABC because the green color is our base color of ABC green development is also the team of our development. And ABC is conscientiously implementing the common taking and come neutrality. So this was 1 of the 3 strategies of our bank. So the selling point, there are 3 different assets.
First one is the fastest speed of development. This is far exceeding the speed of our development. So just now the President has also talked about this — but I wouldn’t talk too much about that. And for the credit we have issued with green issuance and it has a 125% of growth rates for our in-house balance this investment is over JPY100 billion, is up by 20% compared to early days of this year. So our green credit is copay related to energy conservation and the pollution reduction for protection — environmental protection and energy saving. It takes more than 100% of the credit issued by us until the end of June, we have already got this carbon reduction found 29.5 billion, is taking the lead as the counterparts. So for our cost of green financing, it will continuously be lowered it a 3.78%. It’s lower by 42 bp, it is bigger than the reduction of LPR.
Now it’s a 3.53% of the interest rate. So the quality is still pretty good. And we have kept a very good reject rate and the nonperforming rate. So for the next step of the green one, and we are focusing on this overall support direction. The second thing is we have strengthened the cooperation with different ministers and to have this key stage of the development and with this excellent company corporation for Sampo protection with this 3 Cordes group. We have already got a very good one. And we also have given the most protection, and we also helped with people bank to constantly with our own contribution to the co-packing penetrate target with our own contribution.
Thank you so much for your answer with warm and great dedication. So ladies and gentlemen, this is first ever, we do this offline and the Internet and the telephone way, the 3 on way of this conference. So the atmosphere as tier lively, online questions are also very enthusiastic. A large number of people are attending on the telephone, which reflected the high concern and the high expectation of investors, analysts and friends from the media for the performance and development of ABC, I think that we are still like feeling reluctant to go that we will have Mr. Guo to have this conclusion for all the concerns and problems carried by the analysts.
It’s already 1.5 hour. I think it’s already been a long time. So I will just briefly say something I would like to conclude, and I would like to use one word to concludes the H1 presentation of ABC and for the future direction of the operation. I would like to say is like resilient, very resilient. And indeed, we could like most accurately conclude the future and the past. So resilient is we are faced with a lot of challenges. We could be more resilient. And for this resilience of ABC’s operation, first of all, it should be attributed to the resilience of the Chinese economy. So this is the first reason.
And second is also like with the customer base of ABC across the rural area and the urban area. And we also have 2 major positioning as the leader of this rural rejuvenation all is the main contributor to that of this solid economy construction pace with the future uncertainties, I believe there are like heat, like a deeper understanding, and we will have a deeper mode. And with a lot of uncertainties and challenges for ABC, we have like a higher resilience and the company, we should have a higher investment value. That’s my last conclusion.
I would like to thank you all one more time. That’s my short conclusion. So that’s the end of our performance announcement. Thank you. Goodbye.
Question-and-Answer Session
End of Q&A
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