Agricultural Bank of China Limited (ACGBY) Q3 2023 Earnings Call Transcript

Agricultural Bank of China Limited (OTCPK:ACGBY) Q3 2023 Earnings Conference Call October 27, 2023 5:00 AM ET

Company Participants

Han Guoqiang – Secretary of the Board of Directors

Liu Xiaopeng – Non-Executive Director

Wang Changyun – Independent Non-Executive Director

Li Guohu – General Manager, Rural Revitalization Department

Fu Wanjun – Vice Chairman, President, Executive Director

Huang Zhenzhong – Non-Executive Director

Conference Call Participants

Yan May – UBS

Tong Wu – Citi

Xue Yan – Morgan Stanley

Zhou Jie – China Life

Han Guoqiang

Ladies and gentlemen, good afternoon. Welcome all the investors, analysts as well as friends from media to participate in the 2023 the Q3 Announcement of the Result for ABC. And thank you for your long-term support for Agricultural Bank of China.

So today’s announcement, we will have a telephone conference. So now I would like to give you introduction about the team and leaders who are in this meeting with their presence. They are Ms. Deng Lijuan, the Office Head of the Board of Directors; and Mr. Liu; Mr. Huang Zhenzhong; and Mr. Zhang Xuguang from the Tax Department; Mr. [indiscernible] as well as Ms. Wang [indiscernible] from the Asset Management department.

So today’s meeting we have two parts. First part, I will give you introduction about the situation of the performance for Q3. And the second part, I will have open the floor for questions and answer the questions that you are interested.

So first of all, I would like to give you introduction about the performance of Agricultural Bank of China. So this year, we follow the decision deployment of the CPC Central Committee in high-quality development to start with and end with real economy and deepen the reform and transformation to coordinate development and safety, a safety really could result in our process.

And the first one, our overall operating performance reached stable. And with the net profit of over RMB200 billion, increased rate of 5.2% and revenue of RMB53 million amount of rate, the interest revenue reached RMB43 million and the commission service charge is about RMB6.6 million, the average revenue and return of assets is about 0.7%.

And the net asset revenue is about 11.3% and deposit is about RMB3 billion with a newly increased for RMB400 million, increased rate of 15%. The increased amount and the increased date is the number first in our industry.

The loan amount keep a really stable growth and the overall amount is about RMB3 billion with a newly increase of – RMB3 trillion with the increase of RMB2 trillion and we also issued the debt and loans and the sufficient adequacy rate is about 6.2%. And the asset capabilities further improved.

And the second one is about the service. So we have the increase of the loans, and now it’s reached about RMB600 million with an increase of about 18.1%. So with the increase of 1.57% compared with the beginning of the year for agriculture-related loans is about RMB600 million with a newly increased – RMB6 trillion with the newly increased of RMB1 trillion increased rate of 19.1%.

So for the grain industry and for the seed industry, the increased rate of the loans is over 60%. The balance is about RMB200 billion as well as RMB40 billion. And for the new agri loans it’s about RMB1.94 trillion for the construction purpose with the increased rate of 24.1%.

It’s much higher than the average of the county-level loans and for the key cities and counties, the balance is about RMB370 billion with the increased rate of 20%. For the farmers’ loans balance is about RMB1.1 trillion that was newly increased rate of RMB300 billion with an increase rate of 41.9%. The balance and the increased amount equates to record height.

And the third one is about serving the real economy. We are really targeted and highly efficient. And we’ll talk about the medium and long-term loan of the manufacturing industry. For manufacturing industry, the balance is about RMB3 trillion with the newly increase of RMB600 billion with the increased rate of 30.2%. For the medium and long-term loan for manufacturing industry is about RMB1.1 trillion with an increased rate of about 53.4%.

So strategic new industry, the balance is about over RMB1.9 trillion that increased about RMB600 billion with the increased rate of over 54%. For green loans, the balance is about RMB3.8 trillion with the newly increase of RMB1.1 trillion with the increased rate of over 42%. The balance as well as increased rate in [indiscernible] all created historic height.

And for the private company’s loans nearly increased by RMB16 million with the increased rate of 20%. For the inclusive for financial loans is about RMB3 trillion, newly increased about RMB900 billion the increased rates reached 38.2%. The balance, the residual balance as well as increased rate directing the highest in the industry.

So first one is about further expanding the service we have over 800 million customers are remaining the first in the country, and reached – as the newly increased. And also, we have efficient customers for credit card newly increased by 1 million. And the corporate customers reached about 10 million and the monthly active user of mobile phone banks is about 200 million, and which is really high quality and fast increase.

And the agriculture-related product is about RMB4 trillion with an increased rate of 34%. And first one is, we kept a really stable asset quality. The non-performing loan rate is about 1.35%, dropped by 0.02% compared with the first half. The NPL rate is 0.08% dropped by 0.03% and these KPIs have been further improved.

The overdraft loans is about 0.97% dropped by 11 bp compared with the beginning of the year. And also for the reserve ratio, it’s ranking the first and compared with the end of last year increased by 1.52%. And this is the overall introduction about the performance for Q3.

Question-and-Answer Session

A – Unidentified Company Representative

Now let’s open the floor for Q&A. And for this part, we have the Q&A through mobile phone. And also we can answer the question we’ve collected. So now we would like to welcome the participants joining us through mobile phone to ask question and please only ask one question and before your question, please identify your organization. So, now let’s connect the first person. [Operator Instructions]

Unidentified Analyst

Hello, I’m [indiscernible] analyst from CICC. Very glad to have this opportunity. Just now Mr. Zhang introduced about the business of Agricultural Bank of China. You are taking the lead in the whole country. So, congratulations to all the leaders. So I have a question that is, in the first three quarters, I can see that you kept a really faster growth speed. So what’s your future direction as well as your placement strategy for the rest months in August and September, the data and performance is really good and returning back to normal, so economic situation is better. So we would like to ask in the back, do you have more loan requirements?

Unidentified Company Representative

And also thank you for your question. I would like to answer the first one. In this year, I would like to say that Agricultural Bank of China, just like what I mentioned in the first part, we follow the requirements and deployment decisions of CPC Central Committee, and we actually conformed to the macro policy focus on our land business and to get a reasonable structure of placements of the loan, and optimize the loan structure proactively to largely improve the purpose to serve the real economy and we’ve achieved really good results.

And first one is about the loans overall amount increased stably, and we have a really large support to serve the real economy, like we just mentioned. Till the end of Q3, Agricultural Bank of China’s loan balance reached over RMB22.3 trillion with a newly increase of RMB2.5 trillion and with increased rate of 13%. The amount of rate in RMB loan balance reached by 15.5% Y-o-Y. I think that, especially for – it’s worth mentioning that our growth in the past period, it actually – we actually realized all of the rebounds or support of for the rest of the policies of the personal mortgage and this kind of increase in growth showed and demonstrated the highlights and the performance of the high-quality development of our loan service.

Secondly is that, we actually stand out to serve the rural revitalization and the rural-related loans also increased and at a faster speed. For county-level loans, the increased amount is over RMB1 trillion. And for today, it’s about RMB1.3 trillion. For the county-level loans, that amongst all the loans, it account for over 50% now and reached 51%.

And for 160 major county loans actually increased by 7%. And the farmer loans actually also reached over RMB1 trillion, reached RMB1.1 trillion compared with the beginning of the year increased by 31 – RMB32 million and also we have the county-level loans increased by RMB1.05 trillion. And compared with the beginning of the year, it’s increased about 1.4% over 30% and reached over 30.1% in all the loans.

And for the grains, the seed-related loans, and these are actually closely related to the first security. These part of loans, their increased rate is over 60%. For example, for the grain-related loans it’s increased by 60.4% and for seed industry, the loans increased by 60.9%. And also, we can see that these loans are actually with high increased rates and much higher than the average among all the loans in the country.

I’ve also worked proactively to serve the real economy. The loan in the key areas are highly precise. And as an aspect of a stabilized growth, we will further increase the placement of county-level loans. And the infrastructure building, fundraising, we invested for RMB30 million and ranking the top. And for the inclusive loans, it’s the balance – its increase is about RMB93 million and also with its overall balance and increased rates are topping and ranking in the first.

And in manufacturing [Technical Difficulty] loans increased by 34 – 30% compared at the beginning of the year and 35.4%. And for the strategic emerging industry’s loan actually its increased rate is like 54% compared to the beginning of the year. And the green industry actually increased by 42%. I look forward to the next stage about the loan demand and the increase. I think that since Q3 of this year in our country, we kept a really good recovery and stabilized economy and further [Technical Difficulty] advantage.

And according to the statistics in the first three quarters, GDP increased by 5.2% Y-o-Y, and it will largely make a solid foundation for us to reach the annual target of the GDP growth. And the finance and economy are complementing each other. So emerging as a recovering of the economy provide a really good condition for us and provide the support for the financial industry’s development. So I believe that as China’s economy further returning, become recovering, and we will further gain this chance and back the credits and loan demand will also increase stably.

So the next stage, the Agricultural Bank of China will also follow the beginner’s mind as a big national bank to follow the mainstream of high-quality development to further improve the placement. First of all, the potential demand of the market entity to keep a stable growth of overall amount of loans.

Also the second one is showing our responsibility to also work on the rural revitalization and the real economy development. We will be further focused and we will actually support the key areas. The first one is about coordinative development and the safety to also grasp the bottom line of the asset quality. And I hope I answered your question.

Unidentified Analyst

Thank you.

Unidentified Company Representative

Okay. Next question, please.

Yan May

Hello. I’m Yan May Qi, analyst from UBS. I’m very glad to have this opportunity to ask my question. I’d like to ask that for this year, actually we have a really good share price from ABC and also the banking industry face a lot of challenges, but Agricultural Bank of China still keep a really good growth for the profit, higher than the industry and the growth of 7% and as far as I can see.

So I’d like to ask is, what about the driving force and what is the driving force of the strong profit growth? And when you look at the whole year’s revenue and profit, how – what’s your take on that and what do you think? What are the challenge or what are the troublesome parts in terms of the economy side? Could you share with us your idea?

Unidentified Company Representative

Okay, thank you. Thank you. Ms. Yan from UBS for your question. For this question, I would like to ask Mr. Liu Xiaopeng from the Financial and the County Department to answer this question.

Liu Xiaopeng

Okay. Thank you for your question. I’d like to combine with the financial statement of the first three quarters to talk about this revenue institution. Agricultural Bank of China proactively face the economic recovery and coordinate the risk benefit and to also push the stable development of the performance investment.

In the first Q3, the financial performance are taking the lead in the whole industry and revenues is about RMB500 billion and with the slight drop of 0.54%, we are in accordance with the industry. And actually, we can see that we also have increased rates of our revenue, and we have a stable growth. We are looking at is the major driving force.

First one is about, we continuously improved our situation and served the real economy and rural revitalization and the credit amount kept really fast growth. In the first three quarters, the market that is about RMB35 trillion with annual increase of 5% – equates about RMB5 trillion with increased rate of 13%. And this is actually – it’s about the increase of the interest revenue and also for the non-interest rate revenue, and the non-interest revenue we largely developed the online banks and also some service and to work actively about the rate adjustment policies in the CIB, CBRC.

On the other asset for the fluctuation of the financial assets, we optimized the investment strategy in the first three quarters. We have the four type of assets with their evaluation, have a positive increased rate and with a growth of RMB12 billion. And we continue to strengthen the asset’s control management and the provision coverage kept at a high level and the loans actually also have a really fast increase. And at the same time, we also deal with the settlement and the clearance in the first three quarters is about RMB20 billion. And also we have a really promised institution to serve the real economy further improved the efficiency.

But when we think about it comprehensively, actually – we actually also be impacted by the fluctuation of the assets and by then of course here the performance of the revenue setbacks also will show a downward trend. This will continue throughout the year. So in the next stage, we will first expand our channels to increase our revenue and to further push to stabilize the growth of our revenue.

On the other hand, we need to dig more, find more potential and also to guarantee the coordinative development and increase of the structure and also make innovation to improve the intermediary business development in a comprehensive way, optimize the investment portfolio to address the market allocation and to also improve the increase of the non-interest revenue.

And the second one is, lower the cost, improve the efficiency and guaranteeing the stability of the asset quality and to deal with and give up the bad asset and control the investment cost and to work hard to lower the cost and improve the efficiency to control our expenditure and to try to improve the stabilized development of the net profit and provide better value for the stakeholders and better added value for the shareholders.

Unidentified Analyst

Thank you.

Unidentified Company Representative

Okay. Now it’s the time for the next question.

Tong Wu

Hello and thank you for giving me this opportunity. I’m Tong Bo, analyst from Citi. I’d like to ask the question related to the asset quality. And recently, we’ve seen a late series of policies and we actually talked about the business quality and we already have data as well as the city investment. So I’d like to ask you about your trend [indiscernible] the next step is in terms of the pricing policy as well as the asset management what kind of future plan do you have?

Unidentified Company Representative

Okay. Thank you for your question, and I would like to welcome Mr. Wang Changyun to answer this question.

Wang Changyun

Okay, thank you. Thank you for your question. And now the market focus of the real estate industry as well as the urban investment business and ABC’s urban investment. We focus on optimizing the credit structure, the adjusted credit structure. And for the industry’s investment, RMB1 million invested in the cash flow with the industry’s all the projects like with a sufficient cash flow like a public utility as well as the highway, these kind of infrastructure projects.

And in terms of credit structures, we mainly invest in the provincial land for urban investment companies as well as a higher level prefectures. And for a county-level, we mainly invest in the top 100 counties, which are more sound in the financial capability. So, in this aspect, we make sure we have a really good quality of our investment and also the NPL rate is lower than the industrial average that represent a control.

Next step, according to the deployment of City Council and the CPC Central Committee, we will further enhance the management of the urban investment that is to perform the duties as a powerful bank and to also localize a one-stop policy to work with local government and also to follow the requirements of the regulatory body to further implement our work.

In terms of the dealing with the existing business, we will work on it in a comprehensive way and to make independent decisions to support local government as well as a fundraising platform to deal with their reserves. And in terms of the newly incurred business, we have really tight control and when we serve the major project in the county-level, we will also have a tight control and to make sure we will not have a burden to the local that and also have a management about the dealing process as well as repayment to make sure urban investment business can actually follow a really good path and to guarantee the credit risk and have a good control of the risk.

This is about the big investment can afford the real estate. We believe that it is actually a pillar industry for its country, and we still have a good foundation for civil development. So our bank actually stick to the policy that the city’s housing is for the purpose of living, not for the purpose of speculation. And we work proactively and slowly to resolve the risk and crisis in the real estate industry to push a sound development of the industry.

And our real estate business had a really stable growth in this year and our asset quality are ranking at the top and we manage the following way. The first one, we implement the policy requirement of the safety and safety requirements. And also follow – and largely support the housing projects of the additional demand and improvement for this housing. And when we select the customer, we will select those real estate as with a sound experience and who are more powerful in the selected projects with good position. We will mainly select these kinds of projects. And this part, we will guarantee a good quality of our [indiscernible].

In the second aspect, we will – in terms of the structure, we will enhance our investment in the key field, for example, with the public wellbeing like the essential housing and the public housing project. In the third one, we work on the financial service to guarantee the delivery of the housing to also liberate the policy as tools and to follow the requirement and to make sure the housing will be delivered on time.

And the next one is about further to strengthen the due loans. And when it’s about to due, we will communicate with companies with the repayment. And for the project, we have a strong attention of the repayment, but we lack the capital for the temporary stage, we will also arrange a TAM for the delay of the repayment. And also, we will largely support the real estate market, the fund development and especially in real estate. So we’ll focus on the specialized work – and in the refurbishments of the shabby areas in this kind of key project, we will further improve our support and to proactively support the real estate market to meet the efficient demand and also to further strengthen the project management of the real estate and to resolve the risk in that industry to push the development of the real estate industry.

Unidentified Analyst

Thank you.

Unidentified Company Representative

Okay. Next question.

Xue Yan

Thank you for giving me this opportunity. I’m Xue Yan from Morgan Stanley. [Technical Difficulty] about markets, because after the change – adjustment of the rate and do we have an improvement of the early repayment situation? And also, do we have a situation of getting better in this respect?

Unidentified Company Representative

Thank you for your question. And for this question, I think I would like to ask Mr. [indiscernible] from the Individual Credit Loans Department to answer this question.

Unidentified Company Representative

Okay, thank you for your question. In Q3, that’s the regulatory body in order to further improve the situation and to invite the two parties to make improvement of the structure. Now we follow the concepts of financing the public to provide convenient services. Also, now we have about 7 million customers. We downgrade their rate and also for the first housing loans, once rate dropped, the interest burdens were reduced and we have actually delayed their early payments and early repayment. And so actually, the early repayment dropped by over 20% compared with the previous quarter. And some cities, some areas we also have the incentives of lowering the percentage of for installed payment and also provide some verbal policies and also some cities they lift the ban for the purchasing products and which largely motivate the consumers and the market is turning better.

The Agricultural Bank of China will stress this opportunity. In the first three quarters, we invested over RMB60 million and also support the retail credit of the bank and also the mortgage loans also increased compared with the previous quarter.

And next step, Agricultural Bank of China will further follow the deployment of CPC Central Committee and make progress while keep a stable growth and to also follow the mortgage loan policy to support the loan amount of the essential housing improvement housing to also serve the country’s strategy of further expand the internal domestic demand and to support development of real estate industry.

Unidentified Analyst

Okay, thank you.

Unidentified Company Representative

Next question.

Zhou Jie

Hello. I’m Zhou Jie, I’m from China Life. And my question is about the future growth points of your bank as well as the specialty business and what’s the future prospect and you are supporting the rural revitalization. So how are you [indiscernible] to further improve the profit and the revenue?

Unidentified Company Representative

Okay, thank you for your question. And for this question, I would like to welcome Li Guohu from the Rural Revitalization Department to answer.

Li Guohu

Okay. Thank you for your question. The third one – the first one is about the future placement site. And now we – the country actually supports the rural revitalization in the rural agriculture industry, their investments have been further improved. And this largely helps the Agricultural Bank of China to penetrate into this industry to serve the rural revitalization.

On one hand, there is a huge stream of investment in the new round. Now, we have the movement further improved the capacity of farm land as well as the sea revitalization, the improvement of the salt land and also the improvement of rural areas as well as the housing situation.

And second one is about the sufficient consumption amount and the disposable income of rural areas, the increase of faster than that of the urban residents and the country further improved the rural commercial system ability and to also have the bulk commodity as well as like automobiles, the home appliances to reach more rural households. And also there is a releasing of the dividend of the reform. And with a deepening of the reform, the new elements are further emerging.

And for the rural tourism as well as the hotel – rural hotel business also actually improved. And also the rural infrastructure is further improved and the operation and the service level have been further improved. The rural economy developed really fast. And in the future, in the next five to 10 years, the investments of all the amount of rural areas are over RMB15 trillion. This will actually provide really good foundation and luxury for the placement – for the future.

For the second question, how to replace the county-level financial advantage for further improve the profit and revenue. The first is, we need to leverage the advantage of the finance to have more money flow back to the areas and now we have more subsidies and Agricultural Bank Of China will also play the development advantage for county-level to take over to work out the supplemental service and to provide more contributions with the added value service.

And the second is about leverage advantage the asset side. We will further improve the deployment of working in rural areas and further improve the placement and to meet going towards the safety as well as the rural redevelopment and the farmer’s production consumption demand and the increased in demand at the top. In the future, that will continue to improve the placement in the rural areas to further a solid foundations for the future development.

And the third one is about to leverage the advantage of our rate gap. And we will follow the policy of decreasing the service charge and at the same time, with the interest efficiency of the county-level business, this is benefited from the asset data structure of the rural areas it’s really different from that of the country and the city level. This is an advantage. And also, this will help with the holdback revenue and the product first and also it creates a precondition for the [indiscernible]

And the Agricultural Bank of China will further improve the risk control and management of rural area business and leverage the Big Data AI technology to further promote the on-site plus off-site service model and to further expand the business to address the issue of high cost and high risk to further lower its operating cost and to make sure the NPL rate is remaining at a low level for its county-level budget. Thank you for your question.

Unidentified Company Representative

Okay. Next question, we would like to make small change, because after October 20th, we released the announcement for hosting this meeting. And we also collect the questions from the public. And after collection of the questions, the investors are mainly focused on the new regulations and the dividend. They are just about these aspects. So please know that has the capital new regulation will be coming next in January the 1st, 2024. And what’s its impact on the adequacy rates of holdbacks. At the same time, the dividend result of the Agricultural Bank of China, will it change and will it be adjusted?

And we would like it to also have a Q&A and collect the questions and answer these questions we collected from our site and we would like to welcome Mr. Deng Li Juan from the BOD office to answer the question.

Okay, thank you. I would like to answer the two questions. The first question is about the capital new regulation this impact on the capital adequacy rate. Overall speaking, this new regulation demonstrated the integration with international standard, international package also shows the quality, and it helps the commercial sector to further be motivated to serve the real economy further improve the risk management level, and it will come in force by the next year. So, we are acting proactively to prepare for it.

After this coming to force, the adequacy rate will be further improved. According to the current management that by the end of September, our banks currently works with the overall capital adequacy rate it’s 10.4%, 12.6% as well as 16% and according to the forecast after the new regulation coming to force by the change of adjustment of the local administration and the meeting the requirements and our assets will drop and the adequacy rate [indiscernible] to some extent.

Second question is about the dividend. One of that after the IPO, the Agricultural Bank of China had a high level of the dividend issued it’s over 30% every year. And accumulated loan we have about a [Technical Difficulty] of a dividend, and it’s now about 5 times of that IPO capital and let the shareholders enjoy the benefit. And when I look at the dividend of 2022 and its shares dividend rate is 7.6% and 9.1% for the high in that effect and high in revenue and we’ll look at the three years a shares – the three years’ average of dividend ratio is about 6.6% and 8.5%. It is actually really ideal investment target in the long run. When looking at future, we had really a solid foundation.

And here, there are mainly three assets. For the first one is October 20th the supervision actually as the Board wise, regulatory body has to advice and require the company to issue more dividend to provide the investors. And the second, while for the new regulation will help Agricultural Bank for them to issue the adequacy rate and also the margin of the Tier 1 capital and it will also improve.

And also, we have a really stable assets as a dividend, we have a really good foundation. I would like to take also this opportunity to thank all the shareholders for their support and the organization of Agricultural Bank of China. And we actually had early issued about 30 million shares and we can also see that in this year in the market, we have a lot of investors invest more in that.

It also shows the shareholders are really promising for the future of Agricultural Bank of China also demonstrates our values in the long run. So the next part Agricultural Bank of China will continue to support and the – intention of the shareholders to further issue our performance and provide long-term and sustainable return for its shareholders in the future.

Unidentified Analyst

Thank you.

Unidentified Company Representative

Okay. We’ll continue with the Q&A and please connect the next participants.

Unidentified Analyst

Okay. Thank you for giving me this opportunity. I’m Analyst from Citibank. And I’d like to ask you a question about the shareholders and I know that for Agricultural Bank of China, we kept a really stable performance and really good performance. And in the overall market operation and at this background and actually with a lot of our project, and I’d like to ask what’s your plan for the Q4? And could you give us a prediction about the trend as well as the gap for the future?

Unidentified Company Representative

And this question would like to have Wanjun from Asset Debt Management Department to answer the question.

Fu Wanjun

Okay, thank you for the question. And that was actually mentioned, the economy is the base and the financial side we are glad that too are complementary to each other. And we actually think the reasonable control and [indiscernible] of the construction to the economy. We kept really a stable profitability and also improve the high-quality environment of ourselves. But there’s a real economy bring the project of recovery. And I will need to provide a strong support and that was taken by the Q4 and next year Opex will show the pressure in the asset pie that we have down regulating of the LPR 2 types.

And actually, the loan result its suppression sitting and play here with the demand tend to have the real economy to adjust the structure and to also for them choose the position as well as efficiency from the real economy and also for the play a full role of the change of – the interest rate is flat and also narrowing interest rate. And also, we will control costs and benefit from the market mechanism of deposited interest, the pressure of cost of deposits have been eased. We have the confidence that we will keep running the comparative advantage in controlling the deposit cost.

Unidentified Analyst

Okay.

Unidentified Company Representative

Next question, please.

Unidentified Analyst

Thank you. I’m [indiscernible]. I have a question for asset quality. I’m from CGD. And now we have lots of cash rate, you have a really good quality of your asset is not easy. So what kind of measure have you taken? And how do you look at the whole year’s asset quality trend?

Unidentified Company Representative

Okay. Thank you for your question. And for this question, I would like to answer. I would like to answer the question for the first three quarters, Agricultural Bank continuously getting the comprehensive wealth management will further implement the risk control measures and all types and kept a really stable asset quality. Just as you mentioned, it’s not easy, and it’s really not easy to achieve and really good performance. By the end of September, the NPL rates of Agricultural Bank.

As for Agricultural Bank of China as I just mentioned in the first part compared with the beginning of the year, it dropped consecutively – continuously and for the overdue and as overdue loans as well as some other KPIs have been further improved. And for the provision coverage gets really stable growth and the ranking the top in the whole industry. For the detailed data, all of these, we’ve already shared this data in the presentation. So I won’t bore you with more details.

And I think that in order to serve the real economy in order to control risk, it’s actually a precondition and Agricultural Bank of China continues to improves the prospecting effect to take a volunteer and proactive role to control risk and to deal with the biggest variant of the asset quality. Especially, we focus on the structure, session and mechanism and technology, these four assets, we further improve. So that can show in these four assets.

And then in terms of the policy term like the national policy as well as the targets of the economic development process on those things powerful. I will cut it on three advanced manufacturing industry, mortgage industry as well as the SMEs inclusive on it. We will further optimize the investment on for the issued the comparability of the credit structure and to further improve the value creation capability of the values and assets.

And in terms of the expansion, asset quality will continue to improve the granularity on the position of the policy – industrial policy to further process the transformation, upgrading of the industry and to also have the consistent credit policy to avoid the blind placement in the order placements and avoid the heading risk. In terms of the mechanism, we also further hold accountability. And also to bring out the risk in the key areas have one project, one policy to the disposal of the NPL and the bad loans and to further improve the asset quality.

In terms of the technology, we built a complete the typical control system and to further have a digital control – digital risk control platform construction, build a multidimensional customer risk integration model and to further reiterate and optimize and further improve the digitalization and the intelligence of the residential system.

And when we look out the whole year, throughout the whole year, according to our forecast, our asset quality of the Agricultural Bank of China will keep stable. I think that this is actually about the economic structure, economic environment as well as our management capability will decide this. And we look at the macro environment to stabilize the growth and expand the domestic demand further play the role and the whole national economic kept a stable and upward trend. We had a strong resilience and the potential to develop our economy and this upward trend will not change of the asset quality, stability, we provide a beneficiary and the variable external environment.

We look at the credit structure the optimization of it led a solid foundation for the future development of Agricultural Bank of China. And in the first three quarters, when we look at the credit placement, 80% of our loans are placed at infrastructure, manufacturing industry as well as the energy industry and the green credit increased by 40% and the strategic new industry’s interest rate is over 54%. And at the same time, the credit placement is a digital structure and the regional structure also been optimized.

And when we look at the internal management, The Agricultural Bank of China acquired the management need it’s more completed and the whole management chains are more completed and the forward-swinging application of the risk as well as the preposition control are more efficient and the risk control management’s capability will further ensues and that’s all from my side.

Unidentified Analyst

Thank you.

Unidentified Company Representative

Okay. Next person, please.

Unidentified Analyst

Hello. Thank you for giving me this opportunity. I’m Maoyun Yu. I would like to continue to ask a question about the asset quality. And for the provision coverage is about 304.1%. And this is the high among the whole industry we are confident about asset quality. In the provision coverage volume really is more provision to push the internal growth and do you have a threshold or a target internally?

Unidentified Company Representative

Thank you for your question. And for this question, I would like to welcome the General Manager of Financial Accounting Department, Mr. Liu to answer this question.

Liu Xiaopeng

Thank you for your question. As the end of September, the provision coverage is about over 300 and compared with the end of June, its kept a stable level compared with the end of last year increased by over 1.5% and kept a really leading in the industry. And for the risk management capabilities is being further improved, and we will keep a prudent and a stable provision coverage policy and provision policy. And to make sure that the provision coverage level are aligned with risk situation and making more detail.

And first one is to execute the accounting rules as well as certain official requirements. And according to the result, we have a valuation of the result, have a prudent advantage towards the provision. Second one, we will further improve the asset quality management and also to deal do with risk and the key links to avoid the link hoist annual interest of the non-performing loans and to keep a good control of the risk cost. And also the third one is about to further deal with the bad loans and also to deal with the bad debt. And to that to make sure throughout the whole year acquired a cost to keep a stable level. And that’s my question – that’s my answer.

Unidentified Analyst

Thank you.

Unidentified Company Representative

Okay. Next question

Unidentified Analyst

Thank you for giving me this opportunity. I’m Meng Yanxuanjie from Zhoushan Securities. And from your introduction, I noticed that green loans can give up a really fast in the first three quarters. And based on a very high benchmark it also increased by 43%. So it’s a faster increased rates the highlight. So what are the investment? And the second one is about what’s your future plan?

Unidentified Company Representative

And thank you for your question. And for this question, it’s related to the credit. So I’d like to welcome the Credit Management Department Leader, Mr. Huang to answer your question.

Huang Zhenzhong

Okay. Thank you for your question. And for Agricultural Bank of China, we continue to improve the green low-carbon industry to support. And so our CMO to give the data and by the end of September, our credit balances are over RMB3.8 trillion compared with the beginning of the year. We are increased to RMB1 trillion. The increased amount of increase stayed quite a record high. And our green credit investment the action is further to serve the green development of the URI industry and the hydropower industry and to work on the rural revitalization for security as well as those in need for URIs to boost the green finance to integrate with rural revitalization.

The second one is to strengthen the green industry supply. Our focus on the green infrastructure energy, clean energy project, energy, the environmental protection project as well as the ecosystem going and to further increase the percent of the green loans and in the key areas of green capital really faster growth and to support the green loans increase and increase more.

And next step, we will work hard to follow the policies and the spirit of the presence thinking to further put forward the green finance and to make contribution to further build a beautiful China and to further push the coexistence of people in nature.

And the first one, we need to work on the credit placement and proceeding to improve the revitalization and the environment as well as the clean energy to invest largely in business regarding the green industries the most.

And in the second part, we will first optimize the green finance policy system. And we will focus on the optimization of the green loans, the credit policy to further strengthen the coordination and management for the credit policy was to improve the revitalization inclusive finance as well as the real economic high-quality development.

The third part, we will program with green finance product supply and by using the call restoration loans and to work proactively to develop new green finance products to move further work on the green finance loans and securities and also to work on the investment business.

And the third part is about enclosing the transformation with the controlled capability and to work on the credit management of the high-carbon energy to push the green transformation of high-carbon energy and to involve the EST requirements in the whole cost management of the new investment. Therefore the eco-friendly customer will continue to have a one-road level system. Okay. That’s all for my answer. Thank you.

Unidentified Analyst

Thank you.

Han Guoqiang

Ladies and gentlemen. For the interest of time, the ABC 2023 Q3 results announcement will stop here. Thank you, all the shareholders, investors and analysts as well as the media friends for your continued support to Agricultural Bank of China. And I’d like to say thank you for all the colleagues for your interpretations and sharing about the performance and the results of Agricultural Bank of China. At the end of this meeting, do you have any questions, please feel free to approach us and to contact always our Investor Relations team of Agricultural Bank of China. That’s the end of this meeting. Thank you.