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Xia Yangfang: Dear investors, analysts, good morning. China Merchants Bank 2025 3rd quarter result announcement will now begin. I am Xia Yangfang, General Manager of the Office of the Board of Directors of CMB. We have announced our third quarter result in this Wednesday, and this conference will be conducted via audio webcast. And now allow me to introduce the attendee first. And they are Mr. Peng Jiawen, EVP, CFO and Secretary of the Board of Directors; and General Managers from the Asset and Liability Management department, Financial Accounting department, Corporate Finance HQ, Retail Finance HQ and relevant departments. And at the same time, we have also invited independent directors Li Menggang, Liu Qiao, Tian Hongqi, Li Chaoxian and Ms. Li Jian to attend the meeting online. On behalf of China Merchants Bank, I would like to extend a warm welcome to your participation, and thank you for your warm support and investment in CMB. There are 2 sessions in today's meeting. First, we will -- introduction given by Mr. Peng Jiawen on the performance of our third quarter results, takes around 15 minutes. And the second session is the Q&A session, takes around 1 hour and 15 minutes. There will be simultaneously interpretation from Chinese to English for this conference. Now I would like to give the floor to Mr. Peng.
Jiawen Peng: Dear investors, analysts, good morning. This Wednesday, we announced our third quarter results, and I am happy that together with the general managers of relevant departments in the head office, I can communicate with you. First of all, I would like to thank you for your attention and support. And I would like to briefly introduce our operational performance for the first 3 quarters. According to standard practice, the below mentioned statistics are under the IFRS calibre also the H-share announcement calibre. Since this year faced with complicated environment, we stick to our strategic target of building a value creation bank and stick to a dynamically balanced development philosophy of quality, profitability and scale. And our general development has extended to be development in a good momentum, and there are 5 features of our operation. Firstly, our core profit indicators remain stable and trending towards good trajectory, ROAA and ROAE and CAR maintained at a high level. The group's net operating income was RMB 251.28 billion, a year-on-year decrease of 0.52%, with the decrease narrowed by 1.21 percentage point compared with the first half. Net profit attributable to the bank's shareholder was RMB 113.7 billion, year-on-year increase of 0.52%, up by 0.27 percentage points compared with the first half, ROAA and ROAE were 1.22% and 13.96%, up by 0.01 and 0.11 percentage points compared with this half. We continue to strengthen cost management. Our cost-to-income ratio was 29.86%, maintained at an appropriate level. We maintained sufficient and high capital level and under the advanced approach, our CET1 CAR was 13.93%, Tier 1 CAR, 16.25%. Capital ratio -- total capital ratio 17.59%, down by 0.93, 1.23 and 1.46 percentage points compared with last year-end. We also strengthened asset liability management and secured both increase in loan and deposit scale. We cope with multiple challenges and promote the growth of our low-cost core deposit. We maintained optimized liability structure. As of the end of September, our total asset was RMB 12.64 trillion, up by RMB 4.05 trillion compared with last year-end. Total loan RMB 7.14 trillion, up by 3.6% compared with last year-end. Retail loan RMB 3.7 trillion, up by 1.43% and accounted for 51.8% of the total. Corporate loan, RMB 3.15 trillion, up by 10.01% compared with last year-end. Financial investment balance totaled RMB 4.03 trillion, up by 10.52%. Our total liability was RMB 11.37 trillion, up by 4.12% compared with last year-end. Total customer deposits RMB 9.52 trillion, up by 4.64%, accounting for 83.73% of the total liability. The average daily balance of demand deposit accounted for 49.45% maintained at a high level. Thirdly, our NII maintained steady growth and our NIMs decrease narrowed. We continue to strengthen our low-cost funding advantages, influenced by LPR cut and other influence along with insufficient effective credit demand, especially in the retail loan, we have pressure in our loan yield of the interest-earning assets. For that, we continue to optimize our structure and strengthen liability cost control to drive the improvement of our liability cost and offset the pressure brought by the narrower spread. For the first 3 quarters, our interest-bearing liability cost ratio was 1.31%, down by 38 bps, among which customer deposits average cost ratio, 1.22%, down by 36 bps year-on-year, driven by the above-mentioned factors. Our NII was RMB 160.04 billion, up by 1.74%. For the first 3 quarters, our NIM was 1.87%, down by 12 bps year-on-year. The decrease was narrowed. The decrease was narrowed year-on-year. Fourth, our Wealth Management business has shown good growth momentum, and our net fee and commission income recorded positive year-on-year growth for the first time in 3 years. Since this year, we see recovery in the capital market and the bank sees opportunity to achieve good growth in the wealth management business. Our retail clients totaled 220 million, up by 4.76% for the Sunflower and above client, 5.78 million, up by 10.42%. Our retail AUM was RMB 16.6 trillion, up by RMB 1.67 trillion compared with the end of last year, a growth rate of 11%. For the first 3 quarters, our wealth management fee and commission income was RMB 20.67 billion, up by 18%, a faster growth than the first half. Agency sales of wealth management products, mutual fund trust scheme grew by 18%, 38% and 46% year-on-year. Our agency sales of insurance policy was decreased by 7.05%, and driving by the above factors. The group's noninterest income has decreased, narrowed. And for the first 3 quarters, the net noninterest income was 91.24% and accounting for 36% of the total net operating income, among which net fee and commission income was RMB 56.2 billion, year-on-year increase of 0.9%. First positive growth since the year 2022. Fifth, we maintained stable asset quality. Our NPL has maintained an increase in its balance and decrease in its ratio and the NPL balance was RMB 67.4 billion and the NPL ratio was 0.94%, down by 0.01 percentage points. Our new formation of NPL was RMB 48 billion. Annualized NPL formation ratio was 0.96%, down by 0.06 percentage points. The company closely monitored the change of the external environment and enhanced our risk management capability to prevent risk in key areas. Under the bank's calibre, the NPL in our property and manufacturing sector were 4.24% and 0.45%, down by 0.5 and 0.05 percentage points. NPL in retail loan ratio was 1.05%. The risk was under control. The group continued to stick to its prudent and stable provision policy. Our annualized credit cost was 0.67%, up by 0.02 percentage points. Our allowance coverage ratio was 405.93%, down by 6.05 percentage point. Loan loss provision ratio, 3.84%, down by 0.08 percentage point and maintained at a leading position in the industry. The above are our characteristics of our operation for the first 3 quarters. Since this year, China's economy maintained stable and our high-quality development has made good results, but there are still risk ahead, and many uncertainties were still lying in the external environment. This month, we see the fourth plan recession of the 20th CPCCC approved the 15th 5-year plan, mapping out the new blueprint of the next 5 years China's development, also providing good opportunities for the Chinese banks. We will continue to promote our transformation into international comprehensive and differentiated and intelligent development and provide better value for our customers, employees, shareholders, partners and the society.
Xia Yangfang: For the next part, we will enter into the Q&A session. Please follow the instructions given by the operator. Please state your name and the agency you represent before you raise the question.
Operator: [Operator Instructions] Now we'll have the first question. The first question is from CICC , Zhang Shuaishuai.
Shuaishuai Zhang: I have a question for Mr. Peng about your short-term demand and long-term development strategy and the current environment is not favorable for CMB. We don't see sufficient demand from the retail loan, and we see some challenges ahead which will influence CMB's business. We see some of your banking peers. They're trying to make up the lowering pricing by increasing quantity or lower their risk appetite to realize a short-term financial target? And what is your view towards this phenomenon? And how do you strike a balance? I know that the external environment and the capital environment has posed a high requirement on CMB. And what do you think that CMB can use in terms of your new model, your business strategies to balance -- strike a balance between short-term demand and long-term strategy development to realize an offset?
Jiawen Peng: Thank you for your question. Well, according to current situation, we need to hold an attitude that is objective enough. The macro economy is stable in a steady progress, high-quality development momentum is still there. For the first 3 quarters from the macro statistics, the environment withstand the pressure and make steady progress. But objectively, we still see some challenges ahead. The bank's operation, of course. It requires our attention. For instance, you have mentioned that the demand from the retail loan and the fee card, these are all challenges posed to CMB in terms of our operation. But generally speaking, CMB have withstand those pressure. For the first 3 quarters, our performance has shown that we have met our expectation. And we have realized good growth momentum. I would like to briefly introduce my view. Beyond the 5 characteristics I mentioned above, there are some other highlights within our performance. I think to some extent, that could answer your question as well. Through our hard work in this field, we have realized a good development, and maintain good momentum. And these are the aspects I would like to mention. Besides on the revenue and our profit, even though they are under pressure. I won't mention too much about it, but I would like to emphasize that behind our financial indicators, there are some situation that I would like to seize your attention. One is that our customers grow, our customer base growth should show good momentum, no matter our corporate client or our retail clients, we see the client growth as our base of development. And if you take a look at our detailed figure of customer growth, our mid- to high-level clients has secured a growth of over 11% in terms of customer number. Within it, some high value client number, value client number, these growth type are showing good momentum. The CMB's wealth management business have also picked up and realized a double-digit growth in terms of its income. The wealth management income has realized a year-on-year growth of over 18%. If you take a look at excessive wealth management business, our income has secured a growth rate of over 11%. Our AUM when surpassing RMB 16 trillion level. By the end of September, we have already secured a retail AUM of over RMB 16.6 trillion, an increment for the first 9 months of RMB 1.67 trillion, which is quite impressive. Influenced by the external environment, we see the recovery of the capital market, and this has also bring us opportunity. We see these opportunities relying on our good customer base, relying on our capability, and this is what we will continue to nurture. And I also see some other highlights. I want to especially mention that our subsidiary are also showing good growth momentum this year. By the end of September, the total assets of our subsidiary companies were RMB 900 billion, surpassing RMB 900 billion, a growth rate of 8%, representing compared with the end of last year. And the net profit growth has surpassed 16%. We see the current opportunity and they have emerged into CMB's overall development. Besides the highlights in our subsidiary, I think we are also developing in our international business. The total asset of our overseas institutions has surpassed 10% in terms of its total assets. We seize the opportunities arising from the Hong Kong market. And our Hong Kong subsidiaries grew 10% in terms of its total assets and 27% in terms of its profit and income. And our cross-border business, the international BOP has surpassed 90,000 customers. In terms of FX business, we maintained good momentum of growth, a growth rate of 15% for business on behalf of customers. So to -- from the 2 highlights, our subsidiary and our cross-border business, this is 2 of our 4 major developments. We have also captured some highlights from it. And of course, we maintain a good foundation of our asset quality. This is the base of our development. Without a good asset quality, we cannot secure what is building above the asset quality, that is our performance, our customer base and et cetera. So through this year's effort, I think that can reflect what we have withstand. And to coping these pressures, I think we still have some measures that are going to take in response to the insufficient effective credit demand of retail loan, we still regard the retail loan as the cornerstone of our business. And I think we cannot -- we will not change in maintaining relevant market share and our market position in the retail loan business. So in this year, we have also made some efforts in developing corporate loan under insufficient credit demand from retail side and our asset growth in the corporate loan grew by 10%. And these loan growth are in line with the government's guidance. And later on, I will ask our relevant colleagues to introduce the detailed situation. We will also maintain a good management of asset allocation and maintain a stable momentum of our NIM targeted at current risk situation, we will maintain good risk management capability. You have also mentioned some long-term strategy. No matter on the beginning of the year or the interim report or our daily communication with our investors and analysts, we have also mentioned about what we are considering about the future development. We have got our layout for the future development, combined with the recently announced 15th 5-year plan, CMB has also mapping out our own 15th 5-year plan. So generally, we will stick to our plan of value creation bank, building a value creation bank. And for some certain direction, we will continue to focus on the modern industries to enlarge our efforts in the opening up and et cetera. These opportunities arising from some window opportunities, we will seize these opportunities. We will combine the strategic focus of our own 15th 5-year plan with the national's 15th 5-year plan. Of course, I would like to mention again that developing retail business will still be our focus. And the third is that the transformation of the 4 development will continue to be our focus, the international development, the comprehensive development, the distinguished development and the intelligent development. We will speed up this transformation. This will be implemented thoroughly into our own 15th 5-year plan. Besides our efforts in the business development, we are still paying special attention to our daily management, including NIM management, asset quality management, financial management, expense management, all cost management. These all we will continue to pay attention to and also including risk management, we will guard our bottom line to secure our bottom line of risk management. So generally, for current pressure, we are calm, and we have made early preparation. This will be all reflected in CMB's own 15th 5-year plan.
Xia Yangfang: The second question, please.
Operator: The second question is from Mr. [indiscernible].
Unknown Analyst: Congratulations for your results for the third quarter. I'm from PICC. And I think that you have a positive profit growth in the third quarter. And also you have maintained sound asset quality. My question is for Mr. Peng for NIM. Just now, you mentioned about the weak demand in the retail side. So my question will be, what kind of impact will the weak demand be on for your asset structure? What will be the impact on your NIM? So how long do you think that the NIM will continue to decline and whether the declining period for CMB will be longer than that for the state-owned banks?
Jiawen Peng: Thank you for your question. I think NIM is a concern for all the investors. And during the interim results conference, I shared with you my judgment on NIM, namely, we will continue to maintain a leading NIM level, absolute NIM. But for the marginal change, we are under pressure. But I think the decline will be under control. These 3 judgments are made during the interim results. And NIM is -- will be -- is still affected by structure of our asset and liability and also our active management, which is why we have maintained a sound NIM in the past. Nowadays, we are seeing that our retail loans are still under pressure, which is 51% of our total loan portfolio in the past is kind of the backbone of our loan book. And it's also the main reason why we can maintain a leading NIM. So as for -- currently, retail loan are facing pressure in loan growth, but still it has made quite a big contribution to the NIM. And at the same time, we need to see that if there is a slowdown for retail loan growth, definitely, that will have some marginal negative impact on the NIM. That is why I say the NIM marginal change will be under pressure. I think there are main 2 reasons behind the pressure. But of course, we will continue to maintain a leading absolute NIM level, but for the marginal change will be under pressure which is affected by the following factors. The first one is a slowdown of retail loan growth, especially for credit card loan growth and also for consumption loan growth, micro loan growth, all growth rates are slowing down. This has made some challenge to the asset structure. And as for -- compared to the peers, we have a higher proportion of retail loan. So that is why we are facing higher pressure than peers. Second factor is that from the liability cost, just I mentioned, our liability cost is around 1.02%, down by 36 bps, which means that since we have maintained the lowest level of liability cost among peers, and at the same time, we continue to reduce that by quite a big amount, which means that in the future, the further room for us to further lower down the deposit cost will be smaller because if you look at the demand deposit ratio is around 0.05%. So there's a little room to go. And more room coming from the term deposit but we have an even higher demand deposit ratio, which is why we can benefit less compared to peers in the future from the lower down of the deposit cost. And third judgment is that we think that the future trend will be under control, which means that we have our judgment on how deep that the NIM will go down. We have our own analysis and also we have done strategy considerations about how we can counter with the NIM decline. So firstly, I think we'll continue to focus on retail loans. This year, even though retail loans growth is slowing down, it is around 1.34%. But this number is a strong number, but compared to the overall banking industry, we are still higher than the average level, which means we are increasing our market share. And the thing I would like to -- the point I would like to point is that the slowdown of the retail loan is mainly affected by the macro situation. At the same time, we don't want to lower down our risk criteria. That is why we have a slower growth rate, but our market share has continued to increase, which means that retail loan is still a focus of our business. And we are stepping up our efforts and also putting more resources into our retail business, we have made adjustment to our retail business unit and also credit card unit. We are confident that we can continue to improve our market share. And just now Mr. Zhang Shuaishuai from CICC also mentioned about whether we will choose to lower down the risk criteria. I think lower down the risk criteria will not be our choice. The other words to say that is that to make up the shortfall of the loan growth by compromising risk. This is something we will not choose to do. Some say that we need to -- if the price comes down, we need to grow more loans. This means that to grow more amount to make up the shortfall coming from the pricing coming down. But we will not choose to lower down the risk appetite or sacrifice risk to -- in order to gain amount growth. And I think in the future, that the risk from retail side will be stabilized. And as long as the government is trying to lay out many procedures to stimulate demand. And I think at the end of the day, the retail loan will grow again. And also, we will have active measures such as for corporate loans, we have our own strategy for how we grow our corporate loan, and we have reconsidered great debt, including for big midsized and small sized enterprises and the major areas that we would like to focus on. So we think there's a big room to go. And also from liability side, we will continue to maintain a sound liability structures such as the demand deposit proportion you mentioned. And this year, we are seeing that the demand deposit ratio is changing or is trending good towards a better direction. This will be also beneficial to our cost control. And thirdly, is the asset and liability portfolio management that will also help with the NIM side to improve the structure so as to improve the NIM level. So overall speaking, I think for the future trend of the NIM, we are confident that hopefully, that the NIM can reach the bottom and begin to stabilize. Just now for your question, I would like to share 1 of my 2 personal views. I think very important for banking industry today. The first one is that we need to take a perspective from customer. Just as I said, the customer is the foundation of our business as long as we have the customer in place, no matter how product changes because product changes according to the external environment, such as if there's less demand for assets, such as you will face the slower growth of retail, but at the same time, your AUM in your wealth management products can continue to grow. So this also will help with the income for the bank. So taking the perspective from the customer to -- will be very important for banking operation rather than purely focusing on 1 or 2 products. Secondly, I think very important is balanced and diversified operations. A bank's operation and development cannot focus on one aspect. It should be very balanced and also diversified structure such as if there's a slowdown of retail loan, then if we can do better in corporate loan or if we can do better for the asset allocation for retail customers, if they didn't choose to place the demand deposit or if when the market is not performing well, you can provide more deposit with the customer, or when the customer doesn't have demand for loan, but they still have demand for wealth management, which means that customers demand will be very multifacet. So if you can provide a balanced products, multi-level products for the customer, you will have a very balanced and also diversified business structure, no matter how customers' demand changes or how the products they choose changes. Then this balanced and also more diversified structure will help you to maintain a more stable income.
Xia Yangfang: Second question, please.
Operator: Next question is coming from May from UBS.
Meizhi Yan: Can you hear me?
Xia Yangfang: Yes.
Meizhi Yan: I'm May from UBS. And congratulations for your results in the third quarter. It's a very stable results and also trending towards the better direction. My question is still about NIM. Just now you mentioned for liability cost is declining. This will be beneficial for your NIM. Q-on-Q it is around 10 bps down. So the level of the decline is smaller than the peers. I think that CMB has always maintained advantage in liability cost, but now China has ensued a low interest rate environment. So the advantage for you and the liability cost, is that still strong -- as strong as before? How do you view that? Or do you think the advantage is also contracting? The second question is that the capital market is performing better. There are some discussions on deposits moving around to other parts outside the banking industry. So whether there will be any marginal improvement on demand deposit ratio. But in the third quarter, you can see that your demand deposit ratio is still declining. But why? Why the trend is still declining? And also for liability costs, we are seeing that the rental cost, rental linked cost and also the debt costs are also rising. What are the reasons behind that?
Unknown Executive: As for liability cost I think just now Mr. Peng has made his judgment on NIM, I think, it's also applicable to liability cost. Firstly, I think we still have a leading liability cost advantage. For the first 3 quarters, the liability cost is 1.31%, down by 38 bps. And our customer cost is 1.22% and down by 56 bps. And for interbank cost is 1.06, down by 54 bps. So in absolute amount, you can see that we'll have a very low absolute liability cost and a very low absolute level, you can see we still have reached quite a big level of decline. And secondly, Mr. Peng just mentioned that for the marginal improvement, we are under pressure. So you might concern about if compared to peers, whether the decline level might not be as big as our peers. I think the main reason is that it's mainly decided by the features of our deposit costs. In liability costs, we have a higher proportion of customer deposit, namely around 85% and amounted around 50% are coming from the demand deposit. These are very high. This structure feature or characteristic means that we cannot benefit more from the rate card of deposits because rate card is more on term deposit side rather than on demand deposit side. And just now I mentioned demand -- customer deposits make up around 85% of the total. That is why when interbank or market rate is coming down, which means we also cannot benefit from that because some of the peers, if they cannot have so high proportion of customer deposits, well, they will have a more higher proportion of the interbank liability, which means they can benefit more. And especially this year, it's very obvious. The interbank costs are coming down quite rapidly, but we have a lower proportion, lower -- that is why when you see the marginal improvement, we might not be big as our peers. But if you look at the absolute amount, we're still having the very absolute leading position. And thirdly, I think that the trend for the cost deposits to decline is continuous. For September, our RMB demand deposit is only around 1%, and this trend actually continues into October. And for demand deposits for RMB level, we have a daily average growth of over RMB 200 billion. The demand deposit cost is around 1% and it's mainly coming from the demand deposit. So currently, we can see we still have a leading position in the liability cost. And we are continuing to see the trend that the deposit cost is coming down. The only thing is that if you -- from the marginal improvement, since we have a very low absolute amount, that is why the marginal improvement might not be as big as the peers. So I would like to confirm that we are very confident to have a leading liability cost advantage in the future. Second, to your question about the demand deposit ratio. So for this year's trends, we are seeing for the whole banking industry, it's quite obvious that we have a term deposit trend. And this year, I think this term deposit trend is continuing, but from third quarter with the warming up of the capital market, and also M2 and M1 gap are narrowing, we think that there are more and more deposits becoming demand deposit. In September, for the single month, our demand deposit ratio have increased again. So demand deposit ratio is still our advantage. We will take active liability and asset management measures to promote those settlement-related business so as to gain the source of the lower-cost demand deposit. And when the market -- in the market, people tend to have more demand deposit. If this environment continues, we definitely are confident that the demand deposit ratio will continue to ratio will continue to improve. And also for thirdly, for the cost for bonds. Just now I mentioned that since we have a very high proportion of customer deposit, 85% of the total deposit. So for RMB side, we do not have any demand to raise RMB from RMB bond market. So this year, we have done some funding raise from the bond market in the overseas market. And this year, since our overseas branches, they have demand for overseas assets. That is why they have underwritten some overseas bonds, so as to raise the funding side, that is why have led to an increase on the RMB side on the cost on the payable bonds. So marginally, you are seeing for the cost has risen, this is mainly because foreign currency-denominated fundraising. And for the rental cost, this is more related to the rental agreement. Rental agreement is set on a certain date. And that is why we are seeing that the agreement was signed previously, so that cannot change for the time being.
Xia Yangfang: Next question, please.
Operator: Next question is from Zhu Chenxi from Guotai Haitong Asset Management.
Zhu Chenxi: I am Zhu Chenxi from Guotai Haitong. I have a question regarding the income from agency distribution of mutual funds. I noticed that this income realized in the single third quarter, there is a growth rate of 98%, around double. It is relevant with the recovery of the capital market. I would like to understand your outlook towards this income. The growth rate is quite high. Is it sustainable? And the industry itself, the mutual fund industry, we see the third phase fee cut in the mutual fund industry. And what is your understanding of the future influence of this policy, the introduction of this policy.
Jiawen Peng: Thank you for your question. Regarding your first question, my answer is as follows. For the third quarter, the agency distribution of mutual fund is growing fast. It is mainly because of the following reasons. One is that thanks to the recovery of the capital market and the rising risk appetite of our investors. And on the other hand, we have also optimized our structure of mutual fund product, and we enhanced our supply and optimization of the equity-related products. And looking into the future development, the above mentioned 2 factors will continue to give great contribution. But considering the same period of last year, there are some high base effect that we need to take into consideration. I think these 2 factors will marginally become milder in their contribution. And for your second question about the third phase fee reduction in the mutual phone industry, what kind of influence will it bring to the income of this sector? I think there will be influential reasons align behind. And of course, we will be put under the pressure of the influence itself. But we understand that we are still in the phase of advice consultation, and there will be a transitional period for further implementation. So I think that for the income of 2025, the influence is limited. In the year 2026, the influence will be rather negative, and there will be some pressure on our income in mutual fund business. And generally speaking, regardless of the redemption fee and subscription fee and also the self-service fee, the 3 dimensions will be put under pressure internally speaking. But to see from the industry level, it is not the first time that we have overcome this kind of fee cut policy arrangement. We will act aligned with the market trend and the customer demand and to make efforts in the following 2 aspects. Firstly, we will continue to follow our high win rate and diversified allocation strategy and take active measures to enlarge our sustained and retained AUM foundation. And for the second aspect, we will continue to follow the market change and understand more and adjust to customers -- adapt to the customer demand to optimize our structure, enhance our resilience and increase the fee rate and increase the return of our product and realize a high-quality development. These are my answers.
Xia Yangfang: Next question, please.
Operator: The next question is from China Securities, Mr. Ma Kunpeng to raise his question.
Kunpeng Ma: I am Ma Kunpeng from China Securities. I have a question regarding the micro -- small and micro finance business. So in recent years, we see fierce competition in this kind of business, but the demand is quite weak. Especially for the recent period, the asset quality, we see some deterioration and the pricing is also declining. I would like to understand from you about the loan pricing of small and micro size loan. Well, considering the cost, the credit cost, the funding cost, operational cost, when you cover all these costs, will there be further room for making profit? And have you made sufficient provision -- and from a RAROC perspective, will small and micro finance business still become your priority in your retail credit business? These are my questions.
Unknown Executive: Thank you for your questions. I would like to briefly answer in the following aspects. So small and micro finance, these are a sector under the retail finance business. And just now Mr. Peng has mentioned that in the whole market, the retail loan is under a thorough -- a very tough growth trajectory. So from the market perspective, I think the market is still growing in retail finance business, but the trend is slowing down and the social financing, resident loan and the corporate loan, the structure -- the loan structure itself have all reflect the pressure in the industry itself in growing retail loans. But CMB, our market share is undoubtedly increasing. And of course, for small and micro finance, we are still faced with challenges such as insufficient credit demand and et cetera. Banks are quite -- are having very difficult situation and trying to find a way out. For some banks, they're trying to expand their volume by using lower loan pricing. But for CMB, ourselves under this difficult situation, we choose a more balanced strategy to cope with current situation. In response to current situation, we will put risk management in priority. And based on good risk management, we will strike a balance between the growth in quantity and pricing. And of course, the first I'd like to especially mention is that we manage a good control in our risk. We maintain a leading position in the industry in terms of our risk control. The second is that we have secured our pricing in retail loan. We have not used a low-price strategy to enlarge our risk loan volume. It's a reasonable growth, as you can see. In safeguarding our pricing, we have realized a reasonable growth, a year-on-year growth of around 4%. The growth rate itself is quite leading in terms of our commercial banking peers. I would like to talk a bit more about the risk that you have mentioned. We have increased a quarter-on-quarter increase -- a mild quarter-quarter increase in our risk itself, the NPL ratio. Well, based on the industry trend of increasing risk, we cannot be alone. We cannot stand alone to be having an opposite trajectory. We have been doing a lot of assets in studying industry, in the industry chain and to try to seize more qualified clients. And the second strategy, we pay special focus on regions with higher quality developments such as Yangtze River Delta, Pearl River Delta. And for the third strategy, we have maintained good control in having good collaterals and nearly 90% of the collaterals are secured by ourselves in terms of our small and micro finance loans. And our asset pricing has continued to evolve and to reevaluate in terms of its collaterals. So we have quite good buffer for our asset quality of retail of small and micro finance loans. And for the provision itself, we are quite confident that we can maintain quite a good leading position in the industry. About quantity and pricing balance that you mentioned, we have always followed a balanced philosophy in quantity and pricing. We will continue to stick to this principle. And for the second aspect, I believe that under the guidance of anti-involution and self-disciplined mechanism in the industry. I think, to some extent, given some time, the industry will be back to its reasonable competition. I believe that it is quite a good trend that is beneficial to the industry itself. So I believe that the retail finance, the retail loan, the small, micro finance loan will still be the milestone of our business. And of course, I believe that for the external environment, we could be positive that the trend is still there. The Chinese economy is stable and developing in a good progress. So there will be future room for the growth of retail loans. So in conclusion for CMB, small and micro finance loan is under our guidance, our principles of balanced development, and we will continue to maintain a quite certain proportion of small and micro finance loan in retail loan and also balanced proportion of retail loans in total loan. We will also making efforts to ensure that we have certain market share in the industry.
Xia Yangfang: Next question, please.
Operator: Next question is coming from Shen Hu from North Rock.
Hu SHEN: My question is for asset quality. After I read our third quarter results, in the bank's asset quality are moving in the same direction. For CMB, we can see that NPL has rose by 1 bps. It's -- can I understand it is a normal volatility among quarters? Or does it mean there will be continuous pressure on your asset quality? If you look at other figures like you are seeing the overdue ratio are declining but a slight increase on NPL and also stable special mention loan ration. Does that mean that asset quality is still under pressure, but at the same time, still under controllable or we might not be seeing very obvious improvement in next phase. So can you share with us about the NPL formation trend per month? And how do you look forward to the future trend such as in the fourth quarter and in next year, what other factors? What major factors will you have?
Jiawen Peng: Thank you for the question. Firstly, I think for the volatility, I think it's a normal volatility. It's all under control and under controllable range. Secondly, about the future trend of asset quality or what the challenges ahead. I think for asset quality, I think overall, it's under control. But in different phases for different time point, we might face challenges, such as currently for corporate banking. And I think the major impact will be coming from the real estate sector, even though we are stepping up our efforts in controlling asset quality in this area. But periodically, we might see some volatilities and also see some periodic challenges. And secondly, for retail, like consumption loan and micro loan, NPL formation, we are seeing it's still increasing. So these are the major challenges we are facing, and this is also the cause for the volatility of our asset quality indicators. So overall, I think everything is still under the controllable range and maintaining a stable trend.
Xia Yangfang: Next question, please.
Operator: Next question is from Gary Lam from HSBC.
Jia Wei Lam: I'm Gary from HSBC. My question is about your CET1 ratio and also your RWA. In the second and third quarter, we have seen that the CET1 ratio has declined quite rapidly and also RWA growth rates are also faster than what we have expected. So what are the reasons behind? And also what will the -- will this trend continue in fourth quarter in 2026? And whether it will affect your capability of endogenous capital growth and also the continuity of the sustainability of your dividend payout?
Jiawen Peng: Thank you for your question. Indeed, in the second also in the third quarter, as we can see that the RWA growth rate has been quite fast. And as for risk-weighted approach and also for the internal rating approach, we see the RWA growth are speeding up. There are several reasons behind. Firstly, last year in order to -- in line with the new regulatory capital rule, so that is why there was a low base for RWA growth rate last year. And secondly, this is mainly because of the structural change of business this year. And since retail loan is growing lower for the whole banking industry, so all the banks, almost you can see are having a faster growth on corporate side, retail loans slowing down. This is the same with CMB. As we can see its growth rate for corporate loan till now is 10% and also retail only 1.4%. We all know that the risk weight for corporate loan and retail are different. So this structural change has led to RWA growth. And thirdly is that for bill discounting, discounting rate is coming down. So we hold less bill discounting this year. And we invested -- shifted the investment into interbank lending and the risk weight for bill discounting is also smaller, but risk weight for interbank lending are higher. So this also lead to a higher RWA growth. And fourthly, in order to improve our profitability, we also have increased our investment for trading purpose, just even though we have lowered down the holding of bill discounting, but we have done more bill discounting for trading purpose on behalf of our customer. So we have slowed down some of the bills after we bought in according to the regulation before we sell down, it still occupies even for the trading purpose, we still occupies the periodic RWA. This also lead to RWA growth. And fifthly, in order to gain some trading profitability, so we have increased our holding in the PO account and also have done more trading. That is why -- which has led to a higher market risk and also which lead to a higher RWA growth. So all these together, we can see that some are in part due to the business structural change. Some are short period, or volatility lead to a higher growth RWA, especially for the trading parts are lead to RWA growth. And sixthly, definitely -- and also just you mentioned about the CAR ratio, one is due to the RWA growth and the second one is that another factor, except from the RWA growth rate is because from the OCI account. Last year, we have seen a quite a big decline on the bond holding in OCI account, which were quite beneficial for the CAR ratio last year. But this year, we have seen more volatilities in the bond market, which also affected the overall other income in the OCI account, which definitely has affected the net amount of our capital. So these are the main reasons why the RWA growth are faster, but CAR ratio are coming down. And I would like to say that the capital management is very important for our internal management. So in the future, I think from 1 perspective, since we have relevant strong capital base, and that is why we will definitely support the business since the all banking industry's profitability are under pressure. And I think we need to expand our trading parts so as to make profit from the trading gains. So we need to support the trading business. And also secondly, we need to make more precise management of capital. As for different products have a different return on capital, we will analyze that and also to put more resources of capital into the products and business units which have a higher return and also control the resources, which have a lower return. And looking forward in fourth quarter, I think with all measures taken and with more precise management and also we have more -- we need to manage the trend of the CAR ratio. So in the mid and short -- in the mid and long run, no matter the CAR ratio or the Tier 1 ratio, I think we will continue to maintain our leading advantage, but also at the same time, we also need to utilize the capital to support the business, which are effectively will bring us more profitability. So even though there are some marginal volatility. But in the future, in the long run, I think we will still continue to have a sound CAR ratio and also have a leading position and also stable CAR ratio.
Xia Yangfang: Next question, please.
Operator: Next question is coming from Katherine Lei from JPMorgan.
Katherine Lei: My question is for fee income. I thought your fee income has been positive in the third quarter, whether it's a trend that is sustainable. And in the fourth quarter, whether -- since you have a high base, whether it will slow down or become negative. And looking into the detail of fee income, you see that the asset management fee for the third quarter has -- from turning from negative to positive. What's the reason behind that? And also for the banking fee decline, whether the decline level will contracting or slowing down?
Jiawen Peng: Thank you for your question. So firstly, for fee income, I think it's moving in line with our expectation and is moving towards a better direction. In the third quarter, we have seen positive growth for income. And also, this is a positive growth first time since 2022. And in the third quarter for a single quarter, an increased by 17%. So it's quite a strong growth. And just now my colleagues also mentioned about the reason behind the fee income. So one is coming from the wealth management business. We have seen strong growth on that front, especially from the retail side, including distribution fee coming from agency from the -- and also trust products and also brokerage securities. And just now you mentioned about the asset fee growth. Even though for the first 3 quarters, I think it's down by 1.9%, but the decline level is narrowing down. The reason behind, firstly, I think it's related to the capital market performance. Secondly, I think, it's related to the growth of the asset management, total assets under management. In the third quarter, it has increased by 2.9% compared to the beginning of the year. And thirdly, I think we have seen growth on the custodian part. So among the fee income, we have seen quite good performance on wealth management and asset management and also custodian business. So if we look at the trend, I think the capital market is still moving in a good direction. So capital market-related fee income, we are quite confident on that. And the confidence actually is coming from the strong base, strong customer base, especially for quality customers, we are seeing more and more customer growth and also secondly coming from the growth of our AUM. And also -- but we also noticed that in the fee income among for payment related, fees are quite weak and also still under pressure. And year-on-year, we are still declining. This is mainly because of the credit card business. For credit card business, there are 2 reasons behind the decline or I think it's also a way that we observe the future trend. Firstly, is the recovery of the consumption market. In the first half and also in third quarter, we are seeing that since we haven't seen the data in the third quarter of the consumption data. But in the first half, we are seeing that the consumption has been down by 11% for the whole market. So the whole market is still under pressure. Our transaction value only declined by 8%. In third quarter, it is down by 7.7% for our credit card transaction value. I think the decline level of our credit part is better than the overall trend, but still is under pressure. So that is why payment-related income, especially from credit card is still under pressure. And another thing to look at that is even though payment from credit card is under pressure, but our market share is still increasing, and now we still have the largest market share. In the first half, the market share -- our transaction value market share is around 14.32%. I think it's still the highest in the market. But look in the future, with governments continue to stimulate consumption, we think that the consumption market will continue to improve, which will lead to an improvement on our credit card-related business. So we think that we are thing that the trend will be in line with the whole market. And fourthly, just now you mentioned about the investment related other noninterest income. If we look at the other noninterest income, even though there is still a decline in the third quarter, but still the decline level is also contracting. Amounted income from investment are moving in a better direction. Firstly, the long-term equity investment is improving, including our subsidiary like the CMB Cigna according to the new accounting policy, this is -- we have some increase on the income coming from CMB Cigna. And also secondly, coming from the dividend of our funds we have invested in. And thirdly is from the bond trading account. And fourthly, from the FX exchange, we also have turning from negative growth to positive growth. So even though we are seeing negative growth on the other noninterest income, mainly affected by the bond market performance, but other factors are also turning into the better direction.
Xia Yangfang: Next question, please.
Operator: Next question is from Xiao Feifei from Citic Securities.
Feifei Xiao: I have a question regarding wealth management business. Along with the recovery of the capital market, I would like to understand that about CMB's wealth management business, what are the new transitional direction for you? And how do you evaluate the new gesture or new plan for future development? And what is your assessment of your future performance and income in this business?
Jiawen Peng: Thank you for your question. You have just mentioned about a question that we have been considered to think -- the social wealth total volume and the future room to grow, I believe, there are a large room. Well, for us, I think that we would like to seize this opportunity in the overall strategy. We will stick to our principle to develop customer base, especially high-quality customer base. This will be the foundation of our business development. This is the first dimension. And the second dimension is that for CMB, we are unremittedly pushing forward customer service, a new service mechanism of human plus digitalization. We hope that we can implement this new mechanism to realize a further upgrade and further outreach and deepen our service model that we can deliver to our clients. And the third is that we have -- we see there are a larger room to provide professional wealth management consultation service, and we hope that we can provide a stronger service in this area to provide a better customer experience. And for the fourth dimension in the product itself, we think that we need to satisfy our clients' clients and satisfy our clients and center on their demand to realize a high win rate plus diversified allocation strategy to realize our balance in our product metrics to cope with potential changes happening in market itself. So generally, we hope we can enlarge our -- we can deepen our study over the market change and to seize opportunities to maintain a balanced structure and to also be resilient to the market. As you can also see that in the third quarter, our work management fee income actually reflects that what we have been doing is to seize the market opportunity. And finally, in the future. In the financial indicator of Wealth Management business, we think that even though the market has opportunity, we are still faced with many challenges, and these challenges are mainly from these aspects, for instance, the fluctuation, the potential fluctuation of the market, the potential changes in the regulatory requirements, but we are still confident that with the market becoming larger and larger and the increasing of our professional capability that we can maintain a good proportion of the market share and continue to increase our market position, reflecting the financial indicator itself, we will strive our best to overcome the difficulties posed by the third phase fee cut, a fee reduction in the mutual fund industry. And finally, we can realize a stable development, an increase of the fee income and to seize opportunities arising from different types of assets.
Xia Yangfang: We will have the next question.
Operator: The next question is from Mr. Wai Sing Chang from CIMB Securities.
Poyung Chang: I have a question regarding the property sector. We noticed that the real estate NPL is actually decreasing. What is your idea on the progress of exposure in the risk in this sector? And of course, for the next year, we see the maturity of the 16th measure of the property finance. What is the idea on it? And along with the decreasing housing price what is your idea on the influence on your loans LTV? And apart from the property sector, what do you think that the risk that you should pay more attention to?
Jiawen Peng: Thank you for your question. For the property sector's risk exposure progress, I would like to talk about my idea from the following 2 aspects. The first is how do we view the current situation? And the second is how do we cope with it. The first one is that I think from the policy side and from the market side, we are both having some views. From the policy side is that the policy will continue, and our target is to stop the decrease and to maintain a stable development manner. And I think from my perspective, the market is also showing a divergent trend. So in the year -- trillion, for the RMB 1 trillion level and trillion meters -- square meters level, I think these are 2 aspects that reflects the decrease in the property market, which is quite sharp. I would like to use these 2 idea to conclude my view on the industry. And from the bank's perspective, CMB in terms of our property sector's risk, I have 3 ideas. The scale maintained stable and the structure is optimized and then the quality is trending towards a stable position. One figure is that from 2019 to 2020, the real estate sector's proportion in our corporate loan is decreasing from 19% to less than 10%, is the decrease in our scale and our structure is further optimized. First is that in Tier 1 and Tier 2 cities, our projects are mostly centered in these cities accounting for over 82%. And the top 10 corporate clients in the real estate sector accounts for over 40% of our total corporate loan and total corporate real estate loans. So by the end of September, our NPL ratio of real estate loan was 4.24%, down by 0.5%, and we make sufficient provision in this sector, which is 2.5x of the average level of our corporate loans provision, which is very abundant and sufficient. We will continue our policy to back to origin to select qualified region, qualified customer, qualified project and make strict management over our real estate business. The second question is about the 16th measures. And I would like to talk about some of my idea. In fact, I think the 16th measures have casting good impact on the market to ensure the smooth development of the market -- of the real estate market, especially the guaranteed delivery of the housing project. So in terms of the maturity of the project itself, it actually extends and help the project to secure a soft landing. So generally speaking, why do I say so? The policy will be continued to the end of the year 2026. And for some projects, if the project cannot meet the expectation of its expected sales volume, so probably the policy will continue to be extended in terms of its maturity. So from the transitioning of the old project to the white list management, I think these management measures are doing beneficiary influence to resident itself, to companies, to government, to local governments. So generally, I think it is a useful measure that is targeted specifically to its audience. So I believe that if the management -- if the project itself could be put under strict implementation. And for the market, I believe that the land price accounts for 60% of the total project volume, I think -- so based on this current situation, our loan is quite secure in terms of the phenomenon. So the 16th measure itself, probably it will be extended in accordance with the current market situation. I think it is -- it could be considered that the safety itself is under control. And your -- another question about other risk areas that we pay attention to is that besides real estate itself, we are still focusing on other areas such as the debt resolution of the local government and also some industries, for instance, the infrastructure and construction, evolution, relevant industries and et cetera, and also small and micro finance and consumption finance sector. I would like to invite Mr. Lu from the Retail Finance headquarter to introduce more about the risk in the retail finance sector and also the mortgage sector.
Unknown Executive: Well, for mortgage itself, the mortgage risk is based on our good structure. I could introduce that most of our mortgage are centered, 90% of our mortgages are located in Tier 1 and Tier 2 cities. The collateral rate is maintained at a relatively low level. The LTV level was less than 40%. The collateral is also under repeat and frequent reassessment. Even though we are faced with pressure of decreasing housing price, we have a good reserve in the asset allocation behind to ensure that the overall risk is under control. Of course, undoubtedly, the trend is showing some upward trajectory. It is aligned with the whole market, not just CMB itself. So the mortgage risk, there will be experiencing some uptick. This is about our judgment on the mortgage risk.
Xia Yangfang: Next question, please.
Operator: Next question is from [ Claire ] from GS.
Unknown Analyst: My question is still for asset quality, we can see that the NPL formation has risen a little bit. And just now you have mentioned about the reason already. And at the same time, we have noticed the provisioning level has been down by 7%. But in between the provision for loans are increasing. So how do you see the future provisioning level and also for future provisioning trend? And another question is about interest rate, your view on interest rate after the Central Bank decided to go into market and buy bonds again. So how do you view the interest rate trend?
Jiawen Peng: So the first question, in terms of asset quality, we continue to maintain our stance as a stable -- maintain a stable asset quality. And for retail and also corporate loan, we take a prudential view in provisioning. Provisioning level, I think, is more related to the business structure change, such as for corporate provisioning is mainly because more special mention loan for real estate. That is why we have increased the provisioning on that. But at the same time, we definitely see -- have some underwritten for the disposal of the assets as well. So overall, I think the provisioning level is stable. So even though there are some periodic volatility, but overall, it will be -- so firstly, really reflect the asset quality level. And thirdly, I think the volatility will be under control. I have some -- for the provisioning level structure, we can see that we have the provisioning for loan has increased. But for the other non-loan asset provisioning has been declining, and this is mainly related to the total size of the non-loan assets.
Unknown Executive: And for your second question, do you mean that the PBOC has decided to buy or sell bonds in the market? I think after Mr. Peng has made a statement, there is a volatility in the market and the rate has been down by 4 to 5 bps. So the market estimation is that after PBOC resumes the operation since there will be more alliance on monetary policy and fiscal policy that will help the rate to go down again. So in the third quarter, they will be affected by many reasons. There's a rebound of interest rates. So last year, for the 10-year bond was stood at 1.86%. And in the third quarter, I think it's around 1.8%. There are many reasons behind that. Some are because of the capital markets and some of the anti-involution expectation, and they are also for new tax rules on the new issued bonds, which will be not affected by that. But after we have resumed the operation of PBOC in the market, I think that will -- our judgment is that, that will be beneficial for the overall investment income. Just now another analyst have asked about the trend of the fee of the noninterest income. So among the noninterest income, other non interest income are affected by the bond market. Last year, we have a -- since the rate was low and that is why we have a high base of other noninterest income. So in the fourth quarter, we are under pressure in this aspect since -- due to the high base. But after PBOC resumed the operation or if they really have done the operation, I think that the market rate will go down for the bond yield will come down, which will be beneficial for our investment gains.
Xia Yangfang: In order to guarantee the interest of the individual investors, we have collected individual investors' questions and some are more similar to the questions which you have just raised. And now there is a particular one that has not been asked before, which is -- in the first 3 quarters, CMB's corporate banking loan growth rate exceeded 10%. So what are the major areas that the loans has gone to? And whether you have enough reserve -- project reserve in place for the next year. Thank you.
Unknown Executive: And I think by the end of the third quarter, our loan is 2. corporate loan is RMB 2.8 trillion, up by around $26 million compared to the beginning of the year and the growth rate is 10.27%. If we look at the growth structure in terms of industry, the first largest incremental part are coming from manufacturing. The second coming from the power and also -- and third one is coming from the rental and service industry. The incremental power coming from the 3 major sectors compromise around 49.9% of the total income and which is the first 1 coming from manufacturing and for power and also water litigation is around 11.14% of the total corporate loan. And increased level amounted is around -- and also for leasing and also for that is also quite big and also increased by around 23%. So these are the 3 major sectors that we have seen increased for that. And when we look at other regions, we are seeing the Pearl River Delta and also High Sea area and also the -- and also the Bohai Rim region. These are the major areas coming from that. So these are the major areas that our corporate loan goes to. And currently, I think, affected by the overall economy since real estate is not coming up yet, and we are seeing demographically, we are still seeing negative pro income. That is why demand deposit -- for the demand for corporate loans is still under pressure, and there's also a very fierce competition on that. So in the future, I think we still need to look at the right direction to go. And from the reserve and also strategy for next year, from industry and also region strategy, I think that will be similar to the -- this year from industry, we step our efforts also in transportation. And for customer base, except for large focusing on large corporates and large projects, we are also focusing on the midsized corporates to hope that we have more balanced customer structure. And also from a product perspective, we have increased fixed income projects and also M&A projects, which have a longer duration and hope that we can have a more diversified product structure. So we hope that we can keep our balance among scale and also pricing and also asset quality. And can have a dynamic balance according to the changes in the external environment.
Xia Yangfang: Now I think due to the constraint of the time now we have, the last question please.
Operator: And the last question goes to Richard Xu from Morgan Stanley.
Richard Xu: My question is still on loan yields and also loan growth strategy. Just now Mr. Peng has mentioned that there are many policies like the anti-involution and also guidance on banks to have a reasonable loan yield. So when you look at the newly disbursed loans, whether you are seeing the yield is coming stabilizing? And also, secondly, you mentioned about for corporate loan, you want to compete for more quality loans. Everyone want to compete in that area. So what will be your major strategy. And thirdly, from the loan growth rate and also the shareholder return, if the loan yield is not good, whether you will consider to slow down your loan growth rate and also to improve the shareholder return, whether that will be a consideration?
Jiawen Peng: Thank you for your question. I think it's the last question, that will be the conclude of our today's dialogue. So firstly, for the loan strategy, this year's the loan yield is coming down. One is affected by the LPR rate coming down and also affected by the weak demand in the market, which lead to a lower yield. And I think when we analyze whether the loan yield has reached the bottom, I think mainly we need to analyze whether the demand is picking up or not. And secondly, whether the LPR will temporarily stop to going down. So when we look at the LPR cut, our analysis is that with the macro economy, maintain a stable growth momentum. The LPR cut expectation is smaller. But overall, when we look at the GDP Q-o-Q growth rate, the decline of the growth rate is narrowing down like the third quarter is 4.8%. So we expect that for quarterly GDP growth will be lower than that. If there is pressure on GDP growth rate, we cannot rule out the possibility that the PBOC will continue to have the cumulative monetary policy and continue to cut the LPR rate. So this is from the LPR rate and policy rate. And secondly, if we look at the demand side, if the bank's demand is closely related to the vitality in the marketplace and also vitality in our investment market. But according to the data, we have seen that the investment data relating to investment is not still stabilizing yet. So even though the profit growth of industrials have rebounded a little bit, but demand for loans, still, we haven't seen very obvious rebound. And for demand, definitely, we need to seize opportunities to seek for new opportunities. Just now, my colleague from Corporate Banking has shared with you some of the areas that we would like to work on. I think mainly for strategies, these -- some of the industries that we need to be even stronger for and for some industries, we currently might have some shortfall, but we want to make up for that. So we need to continue to optimize our customer structure, such as in the past, for corporate banking, we have a higher proportion of large-scale customer, and we might have the highest proportion of large-scale customer, it's around 50% of the total higher than peers. So it means that for -- there will be further room for optimization of customer structure. And if we can also expand our midsized customers, especially for those quality customer size, I think that will also help with the loan yield. And at the same time, when we think that there might be further room for LPR to further cut down, but the anti-involution, we need to also take into consideration about the anti-involution policy, namely banks are having a more reasonable or on pricing. So that will also help with the stabilization of loan yield. So taking into consideration of all the factors I mentioned above, I think that the loan yield will be trending to stabilized at a level. There will be less room for the rate to continue to go down. But for the newly disbursed loans there and for the existing loan, there's still a gap between the new one and the existing one. So that will drag down the loan yield overall. But if you look at the newly disbursed loan yield quarter-on-quarter basis, I think it's more and more returning to a reasonable level for all the banks. So this is my judgment on that. And just now, I also mentioned that when I analyze the NIM level, that is why I think that the NIM is kind of stabilizing at the bottom range. And under this pricing environment, how can we see the return on shareholders? As I always mentioned that for return on one customer, we cannot only focus on the loan that they have, but we are -- actually, we are providing comprehensive solution service for the customer. Loan is only one part of the complete measure. So we hope that loan is kind of something that we give to the customer and then to simulate the customer can work us with us in all fronts, including investment, including other retail-related business, including wealth management-related business. So the contribution from the customer cannot purely be measured by the loan side, rather, it should be a very complete measure of the contribution from our customer. And also I mentioned for loan growth rate, I mentioned when the macro economy is stable, our loan growth rate will be stable. But when the macro economy is under pressure. Our loan growth will also be stable. I don't want to see much volatility in the loan growth rate. Volatility means risk. So it should be in line with the total macro economy. In line with that and try to be stable and then to increase the overall contribution from the customer. And I think it's almost -- we're almost done for today's conversation. I think our friends, analysts, your questions are really, really very good questions and also invoked our thoughts on that. And also you focus -- you also care about the future trends. So I would like to share with you some of our views on the future trends of our bank's operation. So when we look at the future, I think some are certain and some are not certain. For certainties, I think, firstly, the overall economy will continue to have a stable growth, and make steady progress like the GDP growth rate per year, 5% and also other macro datas are moving towards a better position. This is something that is certain -- under this certainty of the external environment, we are sure that our customer base, our AUM, these are the foundation of our business will make steady progress. This is also certain. So this is the first certainty I would like to say. Second is that for asset quality, this is to control the asset quality is our pursuit, and it's something that we will always emphasize on. We will continue to make sound asset quality and maintain a prudential risk appetite. This is also the certainty of us. Just how you focus on the RWA growth rate. And many investors asked a question about that. I think you don't need to worry too much about that because RWA growth, there are many reasons, some are periodic and some are calibre reason and some are base reason. What I want to say is our risk appetite doesn't change. And also our pursuit to make a contribution to our shareholder return doesn't change. So our philosophy, our banking operation doesn't change. So you don't need to worry too much about RWA. And also, we have maintained a relatively high CAR ratio. So for asset quality and also for capital management, this is also certain. And thirdly, the core financial indicator of CMB to maintain a leading position doesn't change. We -- namely like ROE, like the CAR ratio, like the NIM, like the fee income proportion and also like the retail business proportion in our total business portfolio, these are certain. We will continue to maintain our leading position in all these aspects. And fourthly, I think another certainty is under this low interest rate, low fee rate environment, for banking industries for quite a long term, the banks may maintain a low net profit growth rate for quite a long period. So this is also certain. I think you cannot have unreasonable expectation, too high expectations for our bank's low profit growth rate. So I think for maintaining a relatively low profit growth rate will be stable for a bank. It's like a marathon our bank is running. It's not a short run as you need to have a stable -- as long as you have a stable growth for the -- in the long perspective, that will be a high return. So this is something that is return. And when we look at the uncertainties we have, I think there definitely are some uncertainties we are facing with. So that is why we cannot give you a very precise prediction on some financial data. The first one is side under the certain direction of the macro situation, but the market still are facing volatilities. Like the capital market, like the foreign exchange market, there are many volatilities. And also for the bond market, the 3 markets are facing volatilities and changes like the foreign exchange market is affected by the tariff issue. There are some judgments on that, but we cannot make sure that it will be applicable for all the times. And also capital market, definitely, people think that there will be a bullish market, but definitely, there will be volatility, and we are not sure that is establishing of a bond market. And also for the bond market, we have analyzed on that. There are many factors affecting it, and it's a normal thing for the volatility in the market. So whether -- how it will go, the market will evolve is something that is uncertain and also which definitely will bring some volatility to the profit and income of the banks. So this is uncertainty lying ahead. And the second one is that when the overall risk is under control for some certain area of risk in certain areas or for a particular individual cases, there will be some kind of volatility. Just now you mentioned about property, some of the retail risk, we cannot say that it's time that we can stabilize or we can rebound the asset quality. But what we can say is the overall asset quality is under control, but we cannot rule out the possibility that due to some uncertain events, there may be some volatilities ahead. So these are the uncertainties we also need to face with. And thirdly, volatilities that the monetary policy and also fiscal, we will also are changing. Definitely, these are monetary and proactive policies, but how they implement that, what instruments they will use, these are uncertain like whether they will cut the rate or whether they will cut the interest rate or whether how much fiscal investment that we'll have. So this will definitely affect the bank's NIM, bank's fee income and also bring some short-term uncertainties. So even though with all the uncertainties, I think more are coming from the certain sides with all the factors I mentioned above, I think the most certain thing is that we will continue to focus on quality and also lay priority on profitability and to have a proper growth on scale. We are confident we are making steady progress and moving towards a better direction. So I would like to take the chance to share with you some of our views on the future trend. Thank you.
Xia Yangfang: Thank you. Now it's the end of our third results conference call. If you have further questions, you can go online to see our third quarter results or if you want further explanation, you're welcome to contact us. Our IR team are always there for you. Thank you. Bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]