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Zou Xin: Dear investors and analysis. Good afternoon. Welcome to the ICBC 2025 Q3 Earnings Call. I'm Xin Zou from the Strategic Management and Investor Relations department. On behalf of ICBC, I would like to extend my sincere gratitude to all investors and analysts who have long cared for and supported our bank. Joining us today are Mr. Tian Fenglin, Board Secretary and Chief Business Officer of ICBC, along with heads of relevant departments and institutions. Our directors Lu Yongzhen, Cao Liqun, Dong Yang, [indiscernible] Herbert Walter and Li Weiping are also attending today's briefing online.
Fenglin Tian: Now I will give a brief overview of ICBC's key performance indicators for the third quarter of 2025. Facing a complex and challenging external environment, ICBC has continued to uphold its role as a key pillar of the economy, steadily advancing its 5 transformations, intelligent risk control, modernized structure, digital driver, diversified operation and ecosystem development, achieving a dynamic balance between scale, profitability and risk management. First, profitability stabilized and rebounded. In the first 3 quarters, ICBC achieved operating income of CNY 611 billion, up 2% year-on-year, with positive quarterly growth in 4 of the past 5 quarters, indicating a clear recovery trend. Net profit reached CNY 271.9 billion, up 0.5% year-on-year, turning positive from the decline in the first half of the year pushing annualized ROA and ROE up to 0.71% and 9.3%, respectively. The cost-to-income ratio stood at 26.55%, maintaining a strong efficiency. The NIM decreased by 2 bps from the first half, but the single quarter decline narrowed compared to Q2, providing stable support for the revenue growth. Second, steady growth in business scale. As of end of September, total assets exceeded CNY 52.81 trillion, up 8.2% from the end of last year. Loan insurance and bond investments both remained strong, providing over CNY 4 trillion incremental funding for the real economy. Among this, customer loans reached CNY 30.45 trillion, up 7.3% by the end of last year. Bond investment totaled CNY 16.01 trillion, up by 16.2% and customer deposits amounted to CNY 37.3 trillion, up 7.1%. The number of corporate clients exceeded 14 million and individual customers surpassed 770 million, further solidified the bank's customer base. Third, risk control remains sound and improving. The NPL ratio stood at 1.33%, down 1 bp from the end 2024. The CAR was 18.85% and the provision coverage ratio rose 2.3 percentage points to 217.1% Targeted risk management adherence and effective mitigation measures have kept asset quality stable. In the future, ICBC will continue to strengthen its development foundation by serving the real economy safeguards stability through intelligent risk control and foster new momentum through comprehensive transformation. Looking ahead, we will remain committed to delivering sustained and high-quality returns to our investors. Now we'll open the floor for questions. We welcome all investors and analysts to raise questions.
Operator: [Operator Instructions] I am [indiscernible] from China Securities. We have noticed that the operating income and net income have recorded positive growth. Congratulations on that. So what are the measures you have taken? And what is your outlook for the full year and the future several years? Can you maintain such growth?
Zou Xin: For your question, I'd like to invite the General Manager of Finance and Accounting Department, [ Mr. Tao ] want to answer this question.
Unknown Executive: In the first 3 quarters, as Mr. Tian has mentioned, the indicators have progressed noticeably. The net interest -- the net income has been up 0.52%, returning from negative to positive. And operating income was up by 1.98%, continuing such positive growth. We have taken several measures to reduce costs and increase income. First is to stabilize NII fundamentals which is our main source of income impacted by the recent year's impact. Net interest margin compression is the question -- is an issue commonly faced by the market. So NII has been decreasing. In Q3, we have been trying our best to reduce the decrease to stabilize our fundamentals through quantity and pricing balance. Our NII has performed very well. From the data, we can see that the reduction was minus 0.7% among our comparable peers, such data is the best in the measures of pricing and volume balance in volume, we serve the demand in major strategies and new development and serve the new productive forces to provide the effective credit demand with ample loan growth and debt investments, which increased by CNY 2.04 trillion and CNY 1.97 trillion, respectively. So in volume, it has paved the way for the performance of NII. In pricing, we optimize the asset structure and risk pricing capabilities based on the high-yield asset increase. In deposits, we increased the proportion of term deposits and current deposits so as to contain our interest payment ratio benefited from our efforts in both assets and liability sides. Our net interest margin was 1.28%, down by only 2 bps than half 1, the narrowing rate decline. So this has played a very important role to contribute to our operating income. Second is to cultivate new drivers for growth. If we want to achieve positive growth in operating income, we have to enhance our efforts in fee-based income. We have taken a lot of measures and grasp market opportunities in fee-based income benefited from the capital market enlarging wealth. We have seen high growth in main business. And also, we played well in containing the cost. So the fee-based income recorded CNY 19.9 billion, up by 0.6%. A quarterly improvement throughout the year, we expect and the volume has been leading the peers. And for ICBC fee-based income, if we see from the -- if we see specifically, there is no onetime factors. This is what we have achieved through normal achievement and can be tested by the market in other noninterest income, which is -- which has attracted high attention from the market. From this year, the SOE banks have increased remarkably in this regard. We have seen the fluctuations in stock, bond and ForEx markets. Especially from the Q3, we have seen remarkable changes and which provided opportunities for ICBC in trading. Our financial markets department and capital market investment department have received these opportunities and recorded CNY 46.7 billion increase in this regard, up by 45.7%, providing support for operating income increase. What is worth mentioning is that the diversified operation has achieved remarkable results. The domestic subsidiaries' operating income has been up 34.5%. The contribution was increased from 2.7% last year to 3.6% by 0.9 percentage points, forming a more diversified income structure because of this in stabilizing NII fundamentals, our operating income achieved positive growth. Thirdly, we effectively contained risk costs. We continue to enhance our risk management. We coordinate high-quality development and high-level security, and we deepen intelligent risk control and play the role in the comprehensive risk management and increase our risk resilience and control capabilities, especially in key regions. Our risk cost has been effectively contained by the end of Q3, NPL ratio of the group was 1.33%, down by 1 bp than last year. The asset quality has been increasing. Provision coverage ratio was 217.21%, up by 2.3 percentage points. The loan loss provision ratio was 2.89%, up by 2 bps. So when we effectively contain our costs, we continue to enhance our risk resilience capabilities. Our control of the risk cost can be seen in our operating income, which paves the way for the management of the risks, which has played an important role in balancing the risk and income. So because of the operating income and the net income, the 3 aspects are the main factors. When we look to the future and to the full year, the Q4 will be the time for 14th 5-year plan and the beginning of the 15th 5-year plan. So the package of financial incremental policies continue to be implemented. You may have noticed that the trade frictions of China and U.S. are well contained, paving the way for the good external environment for the development. When the policies are implemented and the vitality is unleashed, we are fully confident of ICBC's high-level development, and we will continue to give into full play the measures and balance the quantity and pricing and cultivate the diversified growth drivers and grasp chances in the volatility of the market and effectively stabilize the noninterest income and net interest income and achieve sustainable growth for future. We will continue to increase our operating strategies, following our strategies and promote our sustainable growth and create a solid and impressive annual and future results for investors and create satisfying returns for all of you. Thank you.
Zou Xin: Now we'll take the second question.
Unknown Analyst: I'm from UBS. My name is [indiscernible] First, I want to congratulate ICBC for your amazing results. And I want to raise a question about NIM. You have already mentioned the narrow NIM. So could you share the current pricing for corporate and retail loans? How do you see the NIM trending going forward? When do you expect to see an inflection point? And is there still room for rate cuts?
Zou Xin: We'll have the asset and liability management department to answer this.
Unknown Executive: Thank you for your question. On corporate and retail loan pricing, this year, interest rate on newly issued loan continued to decline, though the pace of the decrease has narrowed significantly on a quarter-on-quarter basis from January to September 2025, the average interest rate on newly issued RMB corporate loans fell to 2.7% with quarter-on-quarter declines of 16 bps, 4 bps and 4 bps in the first, second and third quarters, respectively. The average interest rate on newly issued RMB personal loans was 3.01% with quarterly -- quarter-on-quarter declines of 29 bps, 4 bps and 2 bps. Overall, the downward trend in both corporate and retail loan rates has moderated. On NIM trends, overall, NIM remains under downward pressure but has shown signs of stabilization, as you mentioned. In the first 3 quarter of this year, our NIM stood at 1.28%, down 14 bps year-on-year with the rate of decline narrowing by 4 bps compared with the previous year. We expect the full year NIM to remain around 1.26%. The main considerations are as follows: First, the impact of monetary policy adjustment on NIM is manageable. In May, the 10 bps cut in the LPR was accompanied by a coordinated reduction in deposit rates, effectively mitigating the downward pressure on NIM. Second, changes in asset supply and demand has -- have improved the pricing rationality. In the first 3 quarters, our credit resources were precisely allocated to key areas under the 5 priorities. The average rate on newly issued RMB loans was 2.78%, a relatively strong performance among our peers. Third, refined liability cost management helped narrow the NIM decline. Deposit volume and pricing remained well aligned with the average interest rate on RMB deposit at 1.32%, down 30 bps from the end of last year. Fourth, optimized balance sheet structures, enhancing medium- to long-term profitability. The share of bond investments in our total interest-earning assets has increased from 22.4% in Q4 2019 to 28.4% currently, up by 6 percentage points. This unrealized gains in our on-balance sheet RMB [ OCI ] and AC bond portfolios can withstand 7 bps upward interest rate reversal, helping to strengthen medium- and long-term profitability. And on the NIM inflection point, we believe that the NIM is likely to stabilize in the coming 1 or 2 years and the NIM will gradually reach an inflection point. First, regulators have recognized the continuous NIM compression and the People's Bank of China has recently emphasized the need to balance supporting the real economy with maintaining the financial sector's health. We have already seen marginal improvement with a smaller NIM decline so far this year. As deposit repricing gradually completes, liability costs are expected to decline further. Our medium- to long-term profitability remains solid. We continue to optimize asset allocation focused on meeting genuine financial needs and proactively increase bond investment to build resilience and long-term earning capacity in a low rate environment. On room for further rate cuts, externally, the U.S. Federal Reserve cuts its benchmark rate by 25 bps in September to 4% to 4.25% range, in line with the market expectation. The European Central Bank has kept the policy rates unchanged for now, but the market expects a rate cut in December. These external developments provide more room for monetary policy adjustments in China. Domestically, given that deposit and lending rates are already at relatively low levels, whether further cuts will be implemented will ultimately depend on overall macroeconomic conditions. That's my answer.
Zou Xin: The third question?
Unknown Analyst: I'm from [ Niju ] from Guangfa Securities. My question concerns noninterest income and other noninterest income in the first 3 quarters, we have seen fee-based income turned positive. What are the major drivers? And what is the outlook for future trends? We also noticed that, as you have mentioned, we have seen volatilities in bond market. What's your outlook for your scale of bond investments and strategies?
Zou Xin: You have raised 2 questions. The first question is about fee-based income. I will invite Mr. [indiscernible] to answer this question. And for the second question of bond investment, I'll invite Mr. [indiscernible] from Financial Market Department.
Unknown Analyst: Our fee-based income turned positive in the first 3 quarters, which is not easy. I have mentioned just now. If we see by breakdown, achieving positive growth is attributable to the diversified support in income side and the control in the expenditure side so that the fee-based income has achieved positive growth. The first, the wealth management business has achieved remarkable results. We grasp chances, the corporate wealth management, personal wealth management and private banking-related income has been up by 25% and 3%. Pension business-related income has increased by 43%. So in this sector, it has contributed a lot to the noninterest income. Second, we increased the effectiveness of the fundamental services with high growth by optimizing our efficiency of services and experience of customer, the third-party payment achieved Q-on-Q growth of 0.7%. Bank card business increased by 0.8%. These are the fundamentals of the noninterest income. providing basis for the fee-based income. Third, in expenditure side, the expenses are effectively contained in the first 3 quarters, fee-based expenses was down by 17%. The main reason is that merchant acquiring and business documentation has seen reduced costs. All the 3 aspects contributed to the year-on-year growth in fee-based income. By Q-on-Q, we have seen that the fee-based income has been increasing. Seen from looking to the future, faced with the policy environment of interest concession, we are unleashing the new vitality of income drivers. In 3 aspects, we will continue our efforts to support fee-based income. First, wealth management. Now we see in this aspect, the related business has contributed a great potential in terms of pension finance and opportunities in capital markets and create new drivers in wealth management, hoping that they can provide more returns in fee-based income. Second, continue to enhance the advantages of fundamental products. We will continue to optimize our payment settlement system and cross-border services and the coverage of our products and increase the resilience in this regard and enlarge our fundamentals. Third, deepen the industrial finance. We will focus on major strategies and modern industrial system and innovate CFS. We are confident to leverage our advantages in customer bases, our network and comprehensive services and fintech and to achieve high-quality and sustainable development in fee-based income. Thank you for your question.
Unknown Executive: In bond investment and income in Q3 faced with interest rate upside trend, we analyze and grab chances in timely and proper manner. We adjusted pace and scale by diversified strategies, we proactively increased the comprehensive yield of bond investments. Looking to the future, the market interest rate may still fluctuate within a range. On the one hand, the Central Bank will still sustain ample liquidity and the demand of allocation from institutions. This will support interest rate and constrain its upside space. On the other hand, Sino-U.S. relations and the stronger stock market may still bring impact to the fluctuation of the market. So against such backdrop, we will adhere to the principle of being stable, flexible and forward-looking. First, scientifically managing pace and scale. We will continuously and closely track changes in the macro economy, policy signals and market sentiment, dynamically optimizing the overall scale, variety structure and maturity distribution of bond investment to balance current returns with medium- to long-term interest rate risks. Second, optimizing allocation and trading strategies. We will deepen fine-grained research on various bond types to optimize the allocation structure. We will flexibly employ strategies such as duration-based trading to capture market opportunities. Third, balancing immediate and long-term considerations. We will always prioritize asset safety and income stability while pursuing reasonable returns we will place high importance on the long-term healthy development and risk resilience of the investment portfolio. Facing a complex and volatile market environment, our bank's bond investment business will continuously deepen market research, strengthen fine-grained management, scientifically manage investment pace and risk exposure and flexibly utilize diversified strategies to enhance comprehensive returns. Under the premise of effective risk control, we will strive to achieve stable and sustainable contributions from bond investment to bank's overall operating income and mitigate the short-term impact of market fluctuations on financial performance. Specific execution will be dynamically adjusted and optimized based on policy guidance, market evaluation and the bank's overall operational objectives. Thank you.
Zou Xin: Now we'll take the fourth question.
Winnie Wu: I'm Winnie Wu from BofA Securities. We've seen the large growth in the corporate loan. I want to know whether this suggests a lack of effective credit demand from the rural economy. And also how did ICBC's corporate and retail loan insurance performance in the first 3 quarters? In the third quarter, this trend -- will they continue in the third quarter?
Unknown Analyst: Thank you for your question. First, I'll brief you on the credit loan insurance in the first 3 quarters. Overall, we did a great job. It's mainly attribute to the upwarding economic expectation in China. In aggregated term, RMB loan maintained a solid growth momentum, driven primarily by corporate lending, while retail loans also achieved a year-on-year increase. As end of September, RMB loan balance at domestic branches reached CNY 28.7 trillion, up 8.5% year-on-year, 1.9 percentage points higher than the average for all financial institutions. RMB loans increased by more than CNY 2 trillion in total. Of this, corporate loans rose by CNY 1.9 trillion, representing an 11.3% year-on-year rise, 2.9% points higher than the system average. Personal loans increased by CNY 175.7 billion, up CNY 28.9 billion year-on-year with a 2.8% growth rate. In terms of loan allocation, manufacturing stood out as a key factor. We have continued to strengthen credit support for key sectors such as technology, innovation and SMEs. In the first 3 quarters, tech loans increased by CNY 1.25 trillion. Inclusive finance loans increased by CNY 596.9 billion. Loan to strategic emerging industries, lately joined specialized enterprises and the core digital economy all grew by over 20%. Notably, manufacturing loan rose by CNY 1.1 trillion from the end of last year, accounting for 54% of total new loans, an increase of RMB 450 billion year-on-year. Structurally, while the share of short-term financing has risen, the trend is consistent with the broader macro environment. There are 2 reasons. At a macro level, fixed asset investment has been weaker than expected, leading to a higher proportion of short-term loans and financing across the economy. At a macro level, enterprises' willingness to expand production has weakened. While the demand for short-term working capital remains strong, we have actively adapted to the shift in economic activity and the clients' needs, providing tailored finance products and service accordingly. It is worth noting that unlike with discounting, direct bill discounting provides direct funding to corporate clients, serving as an effective means for financial institution to support the real economy. In the first 3 quarters, direct bill discounting accounted for 92.5% of our new building financing, providing loan support for SMEs and manufacturing firms. And second, on credit demand, although we are facing temporary weakness in both corporate and household loans, but I believe it is expected to gradually recover as macro policies take effect. Both corporate and retail credit demand has shown short-term softness. However, as macro policies are implemented, credit appetite is likely to improve progressively. On the retail side, fiscal interest rate subsidy programs for consumption and business loans will help unlock retail credit potential. On the corporate side, policies aimed at curbing in vol -- at curbing rat race like competition and resolving overdue receivables, would like to stimulate credit demand among high-quality enterprises. Going forward, we will proactively seize policy opportunities to alignment with the needs of real economy and further consolidate the foundation for sustainable credit growth. You also mentioned the reverse repos. This business is positioned primarily to balance liquidity needs and its scale fluctuates are cyclical. The third quarter reverse repo operations have remained stable with both end of period and average daily balance declining from the end 2024 levels. Thank you for your question.
Zou Xin: The fifth question.
Unknown Analyst: I'm [indiscernible] from CMS Securities. My question concerns asset quality. How do you see the asset quality of this year for ICBC? In corporate banking, what are the impacts of tariff policies? And what is the progress of debt resolution participation in retail banking? What are the reasons for the high NPL ratio? And how do you view the future trends?
Zou Xin: Your question consists of 2 parts. First, about corporate banking, I'll invite credit and investment management to answer. For the second part, I'll invite personal banking department to answer.
Unknown Executive: In the first 3 quarters, the core indicators of credit asset quality remained stable with positive trends. The NPL ratio was 1.33%, down by 1 bp. The NPL ratio for domestic corporate loans was 1.35%, down by 15 bps, reflecting further enhanced risk resilience, key sectors, including manufacturing, wholesale and retail, energy and water conservancy achieved due reductions in both NPL and NPL ratios. New NPLs were primarily concentrated in the real estate sector. The impact of U.S.-China trade policies and tariff negotiations on our corporate borrowers has been limited. Affected clients were mainly those with weak industrial chain resilience and thin profit margins. Borrowers engaged in U.S. export businesses account for a low proportion of our corporate loan portfolio and their resilience on the U.S. market is generally limited. We have made the stress tests and analysis for the tariff policies on the asset quality of corporate loans. The impacts will be limited. ICBC conducts financial support for debt resolution work prudently and orderly in accordance with market orientation and rule of law principles. We collaborate with banking peers to strengthen coordination, secure repayment sources and enhance credit guarantees to contain risks. On the other hand, we diversify -- we use diversified approaches, including debt restructuring, assets revitalization to resolving risks. So the for platform companies with fundamentally sound operations, good repayment willingness, but temporarily liquidity problems, we have adjusted loan tenors and optimized repayment structures to alleviate constructed maturity. So the -- our exposure to such risks, such loans is minimal and rates are already at reasonable levels with limited room for reduction, ensuring a manageable impacts on our net interest margin. So the interest rate reduction primarily target high-cost bonds and nonstandard financing. So in recent years, the personal finance asset quality has been facing pressures with rising NPL ratio. The trend is in line with peers and maintaining a reasonable range comparable to other banks. So we continue to strengthen 3 gateways. First, entry gateway, rigorous pre-lending controls via data modeling and feature attribution analysis across dimensions to dynamically optimize rules and eligibility criteria in terms of products, clients, regions, strategies. Second, monitoring gateway, advanced digital collection systems integrated for retail and inclusive finance loans, deploying multichannel collection strategies. to increase the effectiveness. And we also enhanced data infrastructure with a wire table format for personal credit information, covering fundamental data risk profile behavioral patterns and value metrics to enable data-driven decision-making. Third, in exit gateway, proactive NPL management and disposal emphasis on cash recovery during loan servicing, write-offs mainly target legacy issues and aged NPLs, pilot programs include NPL securitization and bulk transfers of retail NPLs to achieve timely risk clearance. So in the future, we will leverage big data algorithms and AI to build end-to-end risk control models covering onboarding credit, approval, pricing, post-lending and collection through data model-based risk control plus expert loan governance, we will shift from manual controls to smart controls, achieving full progress smart risk management. This will continuously elevate intelligent risk control capabilities and solidify our end-to-end personal loan risk prevention system. Now we are undergoing the important transformation time for personal loans. In the future, we will continue to enhance our products in its innovation and risk control so as to establish the system of housing and non-housing personal loans and meet the demand of personal finance and create a pattern of housing and non-housing personal loans and create a high-quality development in personal finance.
Zou Xin: I'll take the next question.
Richard Xu: I'm analyst Xu Ran from Morgan Stanley. I have questions about inclusive loans because now the market is very concerned about the risk in this sector. So what is the current situation of inclusive loan insurance and risk control? Given the relatively credit demand, what are the future development directions and the risk outlook for inclusive finance. We can see that in the 15th 5-year plan, we want to expand the inclusive finance business. And that's the reason why I want to know the future development direction.
Unknown Executive: Thank you for your support for the inclusive finance on loan issuance. ICBC has taken the inclusive and retail loans as the important aspect of our transformation. By the end of the third quarter, the balance of inclusive loans reached CNY 3.5 trillion, an increase of nearly CNY 600 billion from the end of last year, representing over 20% growth and further rise in the share of total loans. Market expansion through coordinated SME mechanism, leveraging coordinating system among the head office branches, Tier 2 branches and all. We actively participate in local financing coordination task forces and launched a special campaign visiting -- we visited over 3 million SMEs and issued CNY 2.8 trillion in loans, effectively driving the bank's inclusive finance growth. Second, we will accelerate new client acquisition in key sectors. We read out action plans such as core private enterprises implement -- mechanism and empower business and agriculture. We optimized our inclusive finance layout in technology innovation, advanced manufacturing, trade and service revitalization and small-scale foreign trade sectors and proactively expanding into new markets and clients. In the first 3 quarters, we added 84,000 first-time borrowers, 11,000 more than the same period last year. Inclusive agricultural loan increased by CNY 230 billion from the last year, strongly supporting overall credit growth. And third, we will work on our loan products to enhance adaptability. We'll accelerate the upgrade of 3 major products line, credit-based collateral based and digital supply chain loans, deepen the regional innovation mechanism for mechanism products and enrich our inclusive portfolio and application scenarios. By the end of Q3, digital inclusive finance products accounted for 90% of both balance and incremental inclusive loans, while the region-specific products also maintained rapid growth. Accessibility and convenience of inclusive finance services has been further enhanced. We will enhance client stickiness through credit+ services. We have improved our credit plus integrated financial service system that combine lending as a core with diversified supporting system. Through platforms such as global matchmaking happen and agri matchmaking platform, we help enterprise to identify new business opportunities and grow stronger. In collaboration with our China Federation of Supply and Marketing Cooperative, we advance the supply and marketing plus finance initiative and further strengthen the market influence. On risk management, this year, some SMEs have faced operational challenge. And across the industry, the asset quality of inclusive loans has shown a modest rebound. ICBC has consistently placed risk management at the forefront, adhering to the intelligent control plus human oversight approach to build a comprehensive proactive risk prevention system. At the end of September, our NPL ratio for inclusive loans remained better than the industrial average and overall asset quality remained generally stable. We have a stricter credit entry management. We have optimized the key products and credit models, improved model review and decision-making mechanism, enhancing multidimensional data across validation and strengthened coordination between online and offline risk control. We enhanced ongoing risk monitoring by improving coordination among front, middle and back office. We have strengthened refined risk management, reinforcing anti-fraud and risk detection measures, crack down on illegal intermediaries and upgrade our intelligent risk control system across digital processes. We've accelerated the resolution of nonperforming assets. We have broadened disposal channels such as the asset securitization and set up cash recovery of NPLs, consolidating the foundation for the sustainable development of inclusive finance. And on future outlook, going forward, we will continue to follow principle of ensuring volume improving quality, stabilizing price and optimizing structure. We will step up efforts to support the high-quality development. The first is that we will achieve the asset supply. And the second is we will have a more refined products. We will make them online more smarter, and we will have an ecosystem. And we will have a tailor-made financial products for our clients, improve the efficiency of our business. And thirdly, we will have this comprehensive business operation mechanism. We will work on the inclusive finance and as a leading bank.
Zou Xin: The next question?
Juan Shen: I'm Shen Juan from Huatai Securities. My question is related to deposits. We have seen that this year, the capital market has great changes. So what's the latest development of deposit competition against such backdrop? Has the trend of deposit termination eased? Has ICBC observed deposits migrating to BNP or the stock market?
Zou Xin: The first question regarding deposit will be answered by assets and liability department. The second question of deposit migration will be answered by personal banking department.
Unknown Executive: Thank you for your question about deposit termination. Before answering the question, I'd like to introduce to you this year's ICBC's deposit development. Deposit growth this year demonstrated a favorable due improvement in volume and cost dynamic in volume by the end of September, the balance of domestic RMB deposits reached RMB 38.5 trillion, up by 8.5%, 0.5 percentage points higher than the industry average. In the first 3 quarters, domestic RMB deposits increased by RMB 2.8 trillion, a year-on-year growth of RMB 840 billion. By segment, saving deposits rose by CNY 1.6 trillion, up CNY 350 billion year-on-year. Corporate deposits grew by CNY 880 billion, up by CNY 670 billion year-on-year. On pricing, ICBC maintained its comparative cost advantage. By the end of September, the interest payment rate was 1.32%, down 35 bps, the lowest rate and deepest decline among China's big 4 banks. As you have noticed that the deposit termination has eased with sequential declines narrowing gradually in Q2 and Q3. The quarter-on-quarter decline in the average daily share of general demand deposits was 0.6 percentage points and 0.2 percentage points, respectively, conducive to controlling interest payment rate for banks. As for the trend of deposits shifting to nonbank institutions, we think it remains under observation. Now the market liquidity is loose and capital market transactions are active. We have seen that some deposits have shifted to other markets, but no sustained trend has materialized. For example, in September, nonbank deposits across all financial institutions fell by RMB 1.1 trillion, while household deposits rose by RMB 3 trillion, up by RMB 760 billion year-on-year. So the trend is still fluctuating. As for WMP-related questions, I'll invite my colleagues from Personal Finance department to answer.
Unknown Executive: I am [indiscernible] from Personal Finance Department of ICBC. I'll make some supplements. In savings deposits, in the first 3 quarters, the savings deposits continued the rapid growth in recent several years. [ Mr. Fu ] have introduced the data just now in savings deposits from quarter-on-quarter, the savings deposit was up by over CNY 300 billion by the end of September compared with that of half 1. So there is no remarkable change over our expectation. In terms of deposit termination, I'd like to make some supplements. From the data, we have seen that such trend is not that remarkable or remains to be seen in the future. In interest payment ratio, the RMB interest payment ratio was down by 20 bps, just now mentioned by [ Mr. Fu. ] And the decrease is even larger for demand deposits. The reason is that against the backdrop of interest rate decline, the scale of ICBC has brought the decline of interest payment rate. What is also worth mentioning is that the current deposits interest rate decline is even larger year-on-year. It is attributable to ICBC's implementation of 5 transformation strategy in terms of personal finance. We have seen fruitful results. Our customer structure, increments and the scenario expansion, among others, in the first 3 quarters have achieved remarkable progress. Thirdly, in deposit migration. From our general observation, my view is that it is not remarkable, but it still remains to be seen in the future. It can be reflected in the growth of savings deposits, the growth of savings deposits was over 9% this year. Having said that, we have seen that the wealth management product scale at the end of September, the daily average balance was CNY 2.16 trillion, up by almost CNY 150 billion than the end of last year, up by 7.4%. In third-party custody, the growth was 16.4% because the scale is not that large. The balance was over CNY 600 billion, up by more than CNY 80 billion. From these data, we can see that as the savings deposits are growing fast, the WMP and the third-party custody balance are also increasing fast. There is no data remarkably to support deposit migration, but we will continue our observation towards that trend and communicate with the market. Thank you.
Zou Xin: Next question? Due to technical issue, we cannot hear from the questioner now. But we've received her question. This question comes from [ Ms. Lee Lei ] from JPMorgan. And her question is, how was the quality of ICBC's corporate real estate loans in Q3? Can asset quality remain stable in the future given the significant decline in housing prices this year, how are mortgage assets performing? And what is the outlook?
Unknown Executive: There are 2 parts in this question. As we mentioned before, in the corporate real estate sectors, this sector has been under pressure. In the third quarter, the overall asset quality of ICBC's corporate real estate loan portfolio remained stable. From its peak in June 2023, the real estate loan portfolio has shown a steady downward trend. And in the future, I would like to talk about this trend from several perspectives. And in terms of the market, we are seeing the transformation from the old sector to relative new one. We've seen a narrowing decline of housing prices. We believe the impact of the sector on the real estate loans will also be narrowed in the future. And at a structural level, ICBC continued to build a diversified balance and well-distributed investment and financing portfolios. Corporate real estate loans totaling RMB 889 billion, accounting for less than 3% of the bank's total loan portfolio. The bank also maintained adequate loan loss provisions to fully cover the potential risks. In terms of asset selection, ICBC adheres to the region client project integrity standards. Loans are primarily concentrated in key cities with strong population inflows and solid industrial basis. The bank focus on high-quality projects in core areas and the loans are granted strictly in the standards such as the vision project value, normal developer operations and proper management of closed fund flows. In addition, the mitigating effect of collateral remains sound and recovery rates for distressed exposures are highly high. I want to talk about the personal mortgage loan by the end of Q3. At the end of the third quarter, the NPL ratio of ICBC personal housing loans generally in line with industrial trends. We are at this leading position after normalizing for write-offs and securitization disposal. We continue to advance the construction and application of the digital risk control system. Monitoring models have been developed for risk indicators such as collateral quality, excessive leverage, paid and borrower linkage. This model triggered tiered risk control measures and cover the entire loan life cycle pre and post lending. And this enables real-time or near real-time health monitoring, perpetual risk management and precise resource allocation. With the real estate market further stabilizing and the policy effect gradually taking hold, some collateral valuation have declined and the bank continues to closely track changes in property values. As macroeconomic stabilization policies take effect and policies to boost the domestic demand and consumption continue to be implemented, ICBC suggest a deterioration trend of the mortgage asset quality to moderate with no sign of accelerated worsening.
Zou Xin: The last question.
Feifei Xiao: I'm Xiao Feifei from CITIC Securities. My question is about internationalization in the low interest environment, people are discussing about expanding noninterest income and advancing internationalization. So could you outline ICBC's direction, strategy and advantage of internationalization?
Zou Xin: I'll invite [ Ms. Wang ] from International Banking department.
Unknown Executive: ICBC's internationalization has evolved over 3 decades. We align with global and going global strategy. ICBC has consistently anchored its global expansion to national strategies. We ensure overseas network deployment, product development and strategic focus serve national priorities while enhancing global capabilities. Today, as China integrates more deeply into the global economy and accelerates the circulation, ICBC as a primary cross-border financial service provider will leverage its strength to bridge the dual circulation through financing innovation, driving high-quality development. For your question about the strategy of internationalization, now we are focusing on fifth 5-year plan. We align closely with the national strategy to improve our internationalization and improve our service landscape, and we also adhere to compliance and safeguard the security. And also, we promote transformation in promoting internationalization. We will increase the landscape of RMB business and increase the value creation of and strengthen clearing settlement, payment custody. And also, we will connect internal and external environment and provide services. And we will provide financial product lines to the international market and use the dividend of the national strategies to respond quickly to customers. About our advantage our colleagues have mentioned, we have strong customer base, diversified business structure and strong innovation and competitiveness. We -- our network has covered 69 countries and regions. By becoming the shareholder of Standard Bank Group, we have covered 20 African countries. We have established 250 subsidiaries in Belt and Road countries, and we also have 12 RMB clearing banks. So we have become a Chinese bank that serves the domestic circulation and the international circulation. And also, we are the first to establish the integrated global system so as to provide timely funds for the global customers. Also, we can provide cross-border funds in terms of custody settlement, ForEx transaction and the comprehensive financial services. And also, we have great international reputation. We are the Chairperson of the BRICS countries. We are also the Chairperson of the China Europe Alliance and the belt and we are also the partner of BRBR, which has covered 77 countries and regions. And in the eighth CIIE, we are the comprehensive partner in this activity. So in serving these activities, we provide bridge for the partners. Thank you for your question.
Zou Xin: Thank you for [ Ms. Wang's ] answer. Dear investors and analysts, for the interest of time, this is the end of the Q&A session. Today, with the -- with our Secretary, Mr. Tian, we have responded your questions candidly. And thank you for your professional and insightful questions. Thank you for the remarkable answers. In the future, in our strategy and operation, we will absorb your suggestions and provide and promote our high-quality development so as to submit a solid annual answer sheet to all the investors. We will continue to hold reverse roadshow and thematic IR activities. If you have other questions, you are welcome to communicate with our IR team. Thank you for your participation. Best wishes. [Statements in English on this transcript were spoken by an interpreter present on the live call.]