Earnings call transcript: China Merchants Bank posts mixed H1 2026 results By Investing.com

August 31, 2026 adminsr

China Merchants Bank reported mixed first-half 2026 results, with earnings per share of $1.52 coming in below the $1.55 forecast, while revenue reached $87.68 billion, topping the $86.34 billion estimate. The stock rose 3.02% to $50.50 in after-hours trading, suggesting investors focused more on the revenue beat, stable asset quality and upbeat comments on wealth management and technology than on the modest EPS miss.

Key Takeaways

Revenue beat expectations by about 1.6%, while EPS missed by about 1.9%.
Wealth management fee income rose 18.44% year on year to CNY 24.7 billion, its best level in five years.
Net profit attributable to shareholders increased 2.02% to CNY 76.45 billion.
Asset quality remained stable, with the non-performing loan ratio unchanged at 0.94%.
Management said the most difficult phase of net interest margin pressure may have passed.
The bank continued to invest in AI, digital tools and cross-border finance.

Company Performance

China Merchants Bank said it delivered solid interim results for the first half of 2026, supported by steady income growth, disciplined cost control and strong fee income. Net operating income rose 4.83% year on year to CNY 178.135 billion, while net profit attributable to shareholders increased 2.02% to CNY 76.45 billion.

The bank remained highly profitable by industry standards. Return on average assets was 1.14%, and return on average equity was ~13%. The cost-to-income ratio improved to 29.7%, down 0.41 percentage point from a year earlier. InvestingPro data confirms the bank’s track record of profitability and notes it has maintained dividend payments for 24 consecutive years, underscoring its financial resilience through multiple economic cycles.

The results came against a difficult backdrop for Chinese banks, including weak credit demand, a low interest-rate environment and pressure on net interest margins. In that context, China Merchants Bank’s performance looked resilient, especially in non-interest income and wealth management.

Financial Highlights

Net operating income: CNY 178.135 billion, up 4.83% year on year.
Net profit attributable to shareholders: CNY 76.45 billion, up 2.02% year on year.
Net interest income: CNY 112.02 billion, up 5.6% year on year.
Net interest margin: 1.83%, down 5 basis points year on year.
Net non-interest income: CNY 66.11 billion, up 3.56% year on year.
Net fee and commission income: CNY 39.86 billion, up 5.99% year on year.
Wealth management fee income: CNY 24.7 billion, up 18.44% year on year.
Total assets: CNY 13.71 trillion, up 5.47% year on year.
Total deposits from customers: above CNY 10 trillion, up 3.32% year on year.
Non-performing loan ratio: 0.94%, unchanged from the prior year-end.

Earnings vs. Forecast

China Merchants Bank posted earnings per share of $1.52, below the $1.55 forecast by $0.03. That equals a miss of about 1.9%.

Revenue, however, came in at $87.68 billion, above the $86.34 billion forecast by $1.34 billion, or about 1.6%.

The combination points to a mixed quarter rather than a clear disappointment. The EPS miss was small, while the revenue beat showed that the bank continued to generate healthy business volume and fee income. For a large lender operating in a slow-growth environment, the modest miss on profit was not severe enough to outweigh the stronger top line and stable credit profile.

Market Reaction

The stock rose 3.02% to $50.50 from a previous close of $49.02 in after-hours trading. That move suggests the market viewed the report as constructive overall, despite the EPS shortfall. According to InvestingPro analysis, the bank currently appears undervalued based on Fair Value calculations, which may have contributed to investor confidence. The platform lists China Merchants Bank among its most undervalued stocks, suggesting potential upside from current levels.

At the current price, the shares are near the top of their 52-week range of $43.34 to $53.70. The stock is trading about 94% of the way from the low to the high, indicating that investor sentiment remains relatively firm.

The reaction was likely helped by the revenue beat, the strong wealth management franchise and management’s comments that the worst of the net interest margin decline may be behind the bank. No volume data was provided, so it is not possible to confirm whether the move came with unusually heavy trading.

Outlook & Guidance

Management said loan growth is running at around 5%, below the 7% level previously described as appropriate. For the second half of 2026, the bank expects loan growth to remain broadly similar to the first half.

The bank also said it will continue to prioritize quality over scale, especially in retail lending, where demand has softened and risks have risen. Corporate lending remains a growth area, with a focus on green, manufacturing and agriculture-related loans.

On margins, management said the net interest margin fell to 1.83%, but the decline narrowed to just 1 basis point from the first quarter to the second quarter. Executives said deposit repricing is largely complete and that the most difficult period for margin pressure has passed.

China Merchants Bank also reaffirmed its long-term strategy around four themes:

wealth management
sci-tech finance
international development
intelligent transformation

The bank said it will keep IT investment at no less than 3.5% of operating income.

Executive Commentary

President Wang Xiaoqing said the bank carries a large responsibility because it manages more than CNY 13 trillion in assets. He said the bank must “stick to the philosophy, the customer-centric philosophy, to be back to our origin and take customer as our center.”

Wang also said the bank should not give up its strengths in wealth management because of the external environment. “Even though we are faced with challenges, how do we leverage our strengths in extensive wealth management business?” he said.

On growth, Wang said management will “strive, we will make every effort” to maintain stable and steady progress and deliver results to the market.

Chief Financial Officer Peng said, “The most difficult time for NIM decline has already passed,” a comment that may have reassured investors worried about margin pressure.

Chief Information Officer Zhou said AI is already affecting the bank’s operations across the front, middle and back offices, and cited concrete gains in customer service and credit processing.

Risks and Challenges

Net interest margin pressure: The bank’s NIM fell to 1.83%, and the low-rate environment continues to weigh on lending spreads.
Slower loan growth: Management expects growth to remain around 5%, below earlier expectations.
Retail lending risk: Retail loans declined from year-end levels, and the retail NPL ratio rose to 1.16%.
Macro weakness: Weak credit demand and a slowing economy could limit loan expansion and fee growth.
Real estate exposure: The property sector remains a risk area, even though the bank has reduced its exposure and strengthened provisioning.
Competition in wealth management: Growth in AUM and fee income may become harder to sustain if capital markets turn volatile.

Q&A

Analysts focused on five main issues during the call.

First, they asked whether the bank’s recent acceleration in revenue and profit could continue in the second half. Management said it will work to maintain stable and steady progress, but it did not promise faster growth.

Second, analysts pressed the bank on retail strategy and customer loyalty. Executives said China Merchants Bank will keep building premium services for wealthy clients through relationship managers, expert teams and broader product offerings.

Third, questions centered on loan growth. Management said the bank is deliberately avoiding blind expansion and is focusing instead on asset quality, especially in retail lending.

Fourth, analysts asked about deposit costs and net interest margin pressure. Management said large-denomination certificates of deposit have only limited impact on the bank and that liability repricing is largely done.

Fifth, questions addressed asset quality. The chief risk officer said overall credit quality remains stable, with a 0.94% NPL ratio and a 385% allowance coverage ratio. He also said corporate loan quality improved, while retail lending remains the main pressure point.

Other questions covered AI, dividend policy, capital management, synergy across business lines and international expansion. Management said AI is already improving efficiency, while international growth will focus on Hong Kong and five regional hubs, including New York, Sydney, Luxembourg and Singapore.

Full transcript – China Merchants Bank (3968) Q2 2026:

Moderator: Welcome to the 2026 interim results presentation. Today, I will cover three areas. Firstly, an overall introduction, secondly, a detailed information, and thirdly, a business strategy for the next phase. In the first half of the year, the group implemented a strategy of building a value creation bank and adhered to the coordinated development of quality, profitability, and scale. Various operation indicators registered steady progress with positive momentum. This was primarily reflected in the four aspects. First, steady progress in operating performance with distinctive strength and profitability. Net operating income CNY 178.135 billion, up by 4.83% year-on-year. Net profit attributable to shareholders of the bank CNY 76.45 billion, up by 2.02% year-on-year. ROAA and ROAE were 1.14% and 13.43% respectively, remaining at industry-leading levels. Net interest income CNY 112.02 billion, up by 5.6%, affected by LPR repricing, ineffective credit demand, and declining market interest rates.

The net interest margin was 1.83%, down five basis points year-on-year, representing a narrower decline. Net non-interest income reached CNY 66.11 billion, up by 3.56% year-on-year. The percentage of net non-interest income was 37.11%, maintaining a leading position in the industry. Net fee and commission income reached CNY 39.86 billion, up by 5.99% year-on-year, of which income from extensive wealth management reached CNY 24.7 billion, rising by 18.44% year-on-year, representing the best level in the past five years. The cost-to-income ratio was 29.7%, down 0.41 percentage points year-on-year. Second, we delivered balanced asset growth in both scale and quality, with continued improvements in funding costs. Amid ineffective credit demand, we carried out a range of measures to strengthen asset origination and optimize asset allocation. Our total assets amounted to CNY 13.71 trillion, up by 5.47%.

Total loans and advances to customer CNY 7.45 trillion, up by 3.69%, accounting for 54.07% of total assets remaining stable. Among them, general loans amounted to CNY 7.19 trillion, up by 3%. We accelerated the turnover of bill assets, with discounted bills amounting to CNY 265.38 billion, down 17.62%. Investment securities and other financial assets amounted to CNY 4.4 trillion, up by 6.07%, accounting for 31.95% of total assets, a level that the group considers appropriate. We pursued steady liability growth while continuing to optimize deposit structure, further consolidating advantage in low funding cost. Total liabilities CNY 12.43 trillion, up by 5.45%, of which total deposits from customers exceeded CNY 10 trillion, up by 3.32%. Core deposit balance was CNY 7.79 trillion, up by 9.02% compared with the previous year. It accounted for 82.06% of the average daily balance of total deposits, up by 1.37 percentage points as compared with last year.

The average daily balance of demand deposits accounted for 49.6%, up by 0.2 percentage point compared with the previous year, remaining at an elevated level. Interbank deposits grew rapidly, serving as an effective supplement to the funding sources, of which demand deposits accounted for 94.54%. The annualized average cost of interest-bearing liabilities was 1.05%, down 30 basis points year-on-year, of which the average cost rate of deposits from customers was 0.97%, down 29 basis points year-on-year. Thirdly, we maintain stable asset quality and strong risk compensation capacity. The NPL balance was CNY 70.25 billion, up by CNY 3.05 billion, and the NPL ratio was 0.94%, remaining at the same level. The annualized NPL formation ratio was 1.06%, up by 0.08 percentage points. The allowance coverage ratio was 385.1%, and the allowance to loan ratio was 3.63%, reflecting a high level of risk compensation capacity.

The annualized credit cost was 0.69%, representing a slight year-on-year increase of 0.02 percentage point. Fourthly, we strengthened capital management with industry leading capital adequacy level. Risk-weighted asset under the advanced approach and the weighted approach increased by 5.616% and 5.23% respectively, which is generally in line with asset growth. The CET1 CAR, the Tier 1 CAR, and the CAR under the advanced approach were 14.07%, 16.59%, and 18.33% respectively, down 0.08 percentage points and up 0.9 percentage points respectively. As for weighted approach, the numbers were 11.84%, 13.96%, and 15.06% respectively, down 0.08 percentage points, up by 0.6 percentage point, and up by 0.6 percentage points respectively. This is the brief overview of our performance in the first half of 2026. We will now turn to the company’s operational information.

In the first half, amid new developments and challenges in the banking industry, the company proactively responded and seized opportunities, taking extensive wealth management to a new level. The transformation through the four initiatives delivers notable progress, further strengthening the company’s resilience and market competitiveness. This is mainly reflected in the following areas. First, we grew our client base rapidly while scaling up extensive wealth management business. We remained customer centric, further deepened its segmentation and classification-based customer management, and achieved growth in both size and quality of our client base. Retail customers totaled 231 million, up by 3.13%. Among them, Golden Sunflower and above customers reached 6.41 million, up by 8.02%. The number of private banking customers reached 216,000, up by 8.36%.

Corporate customers reached 3.86 million, up by 6.56%, among which the number of newly acquired corporate customers was 347.9 thousand, and digital customer 78.5 thousand, up by 3.7%. The number of corporate customers for reporting transactions reached 1.53 million, representing a year-on-year increase of 14.97%. AUM from retail customers exceeded CNY 18 trillion, up by 7.96% compared with year-end 2025. The half-year increase reached CNY 1.36 trillion, hitting a record high. The average daily balance of corporate wealth management products was CNY 632.61 billion, up by 20.51% compared to 2025. Total asset management amounted to nearly CNY 5 trillion, representing a year-to-date increase of 5.29%. Foreign assets under custody, CNY 23.58 trillion, representing year-to-date increase of 8%, maintaining a leading position in the market. Secondly, we pursued differentiated development with more distinctive business strengths.

First, we continued to consolidate our leading position in retail finance, and we maintained the main role of retail finance business, with its net operating income accounting for 54.35% of the total. We continued to strengthen our professional service capabilities in wealth management. The customers holding wealth management products, 66.17 million, up by 4.05%. Customers covered by TREE system reached 12.58 million, up by 6.98%. In response to market trends and evolving customer demand, the growth structure of AUM of retail customers became more diversified. Agency distribution of non-money market mutual funds and trust products increased by 82% and 40.48% year-on-year respectively. The balance of retail wealth management products increased by 3.88% compared with prior year-end, and the balance of deposit from retail customers increased by 3.7%. Facing rising risks and weakening demand, we prioritized asset quality in retail loans, resulting in a moderate contraction in scale.

Retail loans totaled CNY 3.61 trillion, down 1.11% compared with prior year-end. The percentage of retail loans to total loans and advances was 51.04%, down 1.88 percentage points compared with prior year-end. Amid the industry’s cyclical adjustment, the group adhered to a stable and non-volatility operational strategy for its credit card business. Active credit card users totaled 7.43 million, up by 0.46% compared with prior year-end, and the transaction value was CNY 1.91 trillion, down 5.43% year-on-year, while maintaining a leading position in the industry and our market share further increased. We continued to forge differentiated competitive advantages in corporate finance. Total FPA was CNY 7.27 trillion, up by 8.13% year-to-date. We continued to optimize loan structure to further enhance quality and effectiveness of serving the real economy. Total corporate loans, CNY 3.2 trillion, up by 9.27%.

Growth of loans in key areas such as green loans, manufacturing loans, and agriculture-related loans are significantly outpacing the overall loan growth. The average daily balance of deposit from corporate customers, CNY 5,230 billion, up by 6.1%, of which demand deposits accounted for 50.14%, down by 0.8%. We continue to enhance professional service capabilities of retirement finance. The number of individual pension accounts opened exceeded 17 million, with the pension funds under custody amounted to CNY 1.7 trillion, up by 9.68% compared with prior year-end. We provided diversified financing services to technology enterprises, serving 378,300 FinTech enterprise customers, including more than 200,000 enterprises listed on FinTech rankings. We continue to upgrade the distinctive brand of enterprise digital intelligence finance. Compared with year-end 2025, the number of customers using Treasury Management Cloud services increased by 14.26%. Those using cloud-based host-to-host connection increased by 13.44%.

We continue to enhance professional capabilities in investment banking or financial market businesses. FEA contributed by investment banking business increased by 8.64% year to date, and the net underwritten amount was CNY 284.16 billion. The M&A financing business value amounted to CNY 165.92 billion, up by 19.84% year on year. We have completed multiple deals with significant market influence. Regarding financial markets business, the number of wholesale customers involved in client flow trading was 78,000, up by 18.38% year on year, and their transaction value amounted to $212.72 billion, up by 33.64% year on year. New business customers totaled 191,400, up by 11.49% year on year. Direct through discounting value was CNY 1.73 trillion, up by 26.61%, ranking second in the market. Fourthly, we accelerated the development of branches in key regions to strengthen their market competitiveness.

Multiple key indicators, including growth rates of retail customer base, retail AUM for deposits, corporate loans, net operating income, and EVA of branches in key regions were all higher than the average level of all domestic branches. The contribution was increasing. The proportion of key region branches in the total of all domestic branches increased regarding retail AUM balance up 0.26 percentage point, corporate loan balance up 0.56%, and average daily core deposit balance up 0.22 percentage points. Thirdly, we steadily advanced comprehensive and international development with value contribution significantly improved. Total assets of major subsidiaries, CNY 1.05 trillion, up by 10.16% compared with prior year-end. Net operating income accounted for 12.93% of the group’s total, up by 0.39 percentage points. Net profit for CMB Wing Lung Bank reached HK$4.73 billion, up by 55.88%. Total assets, HK$587.8 billion, up by 11.63%.

Net profit of CMB International Capital, HK$3.07 billion, up by 124.14%. Total overseas asset management business reached HK$94.37 billion, up by 25.27%. Net profit of CMB Financial Leasing was CNY 1.63 billion, down 42.44% year-on-year. This is mainly because of a decrease in fee income last year. The leasing business was CNY 7.49 billion, maintaining the leading position. Net profit of CMB Wealth Management, CNY 1.51 billion, up 10.92%. Total wealth management products reached CNY 2.74 trillion, up by 3.79% compared with prior year-end, keeping leading position. Net profit of China Merchants Fund was CNY 802 million. The non-monetary mutual funds under management was CNY 603.15 billion, up by 5.78%. Net profit of CMB Sincere & Credible Capital Management was CNY 52 million, down 12.68% year-on-year. Trusted management of insurance funds totaled CNY 279.45 billion, up by 19.78%.

The total assets of overseas institutions increased by 7.01% compared with prior year-end, and net operating income rose by 30.5% year-on-year. Each institution in Hong Kong seized opportunities and expanded their operations, achieving positive growth. Net operating income grew by 32.71% year-on-year. Total assets under custody of Global Custody Hong Kong Center exceeded CNY 1 trillion. CMB International Capital completed 3 Hong Kong IPO sponsorship projects and 24 Hong Kong IPO underwriting projects. Cross-border business grew rapidly. The number of corporate customers in respect of international balance of payments reached 93.7 thousand, and the international balance of payments of corporate customers amounted to $263.6 billion. Both comprehensively promoted intelligent development and continuously strengthened technological advantages. First, we promote AI development and application. We continue to refine our self-developed large model infrastructure. Average daily token throughput increased by over 78% compared with 2025.

256 domestic domain-specific models were deployed, up by 40%. A total of 1,386 intelligent scenarios were deployed, up by 62% compared with prior year-end. Large models applications have delivered tangible quality and efficiency gains. AI contributes 13.88 million equivalent employee working hours in terms of efficiency gains. We also built a bank-wide knowledge management framework that enables large language models to unlock knowledge value across business lines. We have increased our client-facing service capacities using AI and increased our capacity of complex business service. We have launched AI cell bank and AI Agent serving wealth management partners, was newly launched. Private banking AI tools now deliver one-stop legalized service framework for asset allocation, and protection, and succession planning. We have upgraded our client service system. The AI-powered intelligent customer service digital human system for institutional scenarios has served customers 37.66 million times.

Internal management intelligence upgrade continued to accelerate. AI is reshaping credit process. We accelerated deployment across the pre-lending, lending, and post-lending stages. In terms of business management, intelligence tools now span the front, middle, and back offices. Fifthly, we uphold the bottom line of risk control, and we reinforce advantages in asset quality. In the face of various risks and challenges, we step up efforts to prevent and mitigate risk in key sectors and continuously refine risk management strategies. Overall asset qualities remained sound. We adhere to the strategy of stabilizing growth, preventing risk, and optimizing structure, strengthen risk management, and control in sectors such as property and manufacturing. With corporate loan asset quality continuing to improve, NPL ratio of corporate loans 0.78%, down 0.11 percentage point. Among them, the NPL ratio of property industry was 4.47%, down 0.31 percentage point.

The NPL ratio for manufacturing industry was 0.39%, down 0.04 percentage point. Confronted with rising retail loan risks across the industry, we comprehensively reinforced retail loan risk management and optimized the asset structure. Retail asset quality remained stable and controllable, maintaining a relatively strong position within the industry. The NPL ratio of retail loans was 1.16%, up by 0.1 percentage point. Among them, residential mortgage loans was 0.48%, down 0.03 percentage point. Credit card loans 1.9%, up by 0.16 percentage point. Retail microfinance loans and consumer loans were 1.34% and 1.39% respectively, up by 0.12 percentage points and up 0.37 percentage points respectively. In the end, I would like to give a brief introduction to the business strategy for the next phase.

Looking ahead, we will fully implement China Merchants Bank’s 15th 5-Year Strategic Plan, maintain strategic focus, uphold fundamental principles and breaking ground, accelerate capacity building and advanced transformation through the four initiatives to consolidate existing strength while building our new advantages, achieving distinctiveness within the colony business model. Firstly, we stay committed to long-termism to build stronger core competitiveness. We will remain customer-centric. We enforce the central role of retail finance with wealth management, uphold asset quality as the foundation, and sustain strong technology support. While maintaining strategic focus, we will adhere to the principle of professionalism and market orientation, continuously innovating in products, services, technologies, and business models. By deepening and refining our core businesses and this business and revenue structure, we will take on perfect earnings plus feature, which is resilient in down cycles and flexible in up cycles.

Secondly, capture structural opportunities to continuously cultivate new drivers for medium and long-term growth. In retail finance, we will capitalize on the historic strategic opportunities in wealth management, centering on asset allocation to enhance professional wealth management capabilities and improve customers’ sense of fulfillment and experience. Secondly, in corporate banking, we will further strengthen professional operation in different industries. Deepen investigation across a broader range of sectors to refine the one branch, one policy, one industry, one policy strategy in key region branches to enhance differentiation. Thirdly, we will also seize opportunities arising from new quality productive forces, leveraging synergies between CMB and its subsidiaries. We will strive to build SciTech finance as a distinctive feature of CMB.

Fourthly, we will leverage our local and global presence and establish a development framework comprising the head office, plus institutions in Hong Kong, plus the five regional hubs to build distinctive feature in cross-border finance. Thirdly, we will seize near-term decisive moves to sustain steady progress in operation. We are focused on stabilizing NIM, maintaining our advantage in low-cost deposits, and strengthen risk-based pricing on the asset side, and increase our risk compensation capacity. We will leverage our strength of subsidiaries to better expand NII and optimize revenue structure, keeping revenue broadly stable. We will seize capital market opportunities, further extensive wealth management and financial markets businesses to enhance value contribution. Capital management will be strengthened to improve capital returns and reinforce capital resilience. Fourthly, we will accelerate intelligent transformation to further extend tech leadership.

We will sustain technology input and intensify technology empowerment to further promote business growth with technology. Seizing the opportunity presented by AI, we will broaden and deepen AI applications to drive improvement in customers’ experience, internal efficiency, and risk management. We will accelerate the building of an AI-powered organization, appreciate the capabilities of workforce, and deepen people plus digital intelligence model, establishing CMB as a benchmark for intelligent transformation in the AI era. Fifthly, we will stay anchored to risk-based approach and reinforce foundation for sustainable development. We uphold prudent and stable risk culture, operating within the boundaries of our capabilities. We will stay highly vigilant to early signs regarding asset qualities, strengthen risk prevention and resolution in key areas including retail risk, credit, and the property sector, and intensify collection and resolution efforts.

Internal control will be strengthened with rigorous safeguards against credit risk, market risk, operational risk, and liquidity risk, providing a solid foundation for high-quality development. We will now open the floor for questions. You are welcome to raise question. Please follow the instruction of the operators and your name and the institution you represent. For mobile users, please tap More at the bottom of the interface and select Raise Hand. For PC users, please click Participants and choose Raise Hand. Please ask one question per turn. When invited, please turn on your microphone and camera and state your name and institution you represent. Thank you. We will now take the first question. We will have the first question from Asset Management, Zhù Chéngxī.

Zhù Chéngxī, Analyst, Asset Management: Can you hear me?

Moderator: Yes, we can hear you.

Zhù Chéngxī, Analyst, Asset Management: Thank you, senior management, for giving me the opportunity to raise the first question. My question is for Mr. Wang Xiaoqing. You just assumed to be the President of CMB. I have a very simple question for you. For this time, as you assume your new role, what is your actual inner thought? We all know that you have assumed your new role for around half a year. You have done a lot of work, so I would like to learn from you, what about your mindset, your idea about the future development of CMB’s business? We see CMB in 2Q, your revenue, your profit all accelerate. Will that trend continue to the second half of the year?

Wang Xiaoqing, President, China Merchants Bank: Thank you for your question. By the end of April, I assumed my new role to be the President of CMB, and after that, first of all, I feel strong responsibility, which was reflected in the following aspects. Well, first of all, CMB has been managing 13 trillion CNY asset sites. It shoulders a very strong responsibility and mission. Second, the bank-wide development is highly relevant to 120,000 CMB staff’s life, and how could we

inherit the good experience and the results from generations of CMB staff’s hard work and stick to high-quality development. Third, the capital market. Our investors have attached great importance and recognition to CMB. How do we live up to their expectation? How do we live up to what they expect from us? It is also a very important issue for us. I can recall an individual investor from our shareholders meeting that their funds are coming from their everyday lives, so making good investments is what they want. We should guarantee them with good results and deliver to our investors so as to guarantee their return. Of course, from all these three aspects, these are the most important aspects. We also have other dimensions. CMB are faced with important development opportunities. Of course, there are challenges ahead. I have been discussing with many investors in different scenarios.

Some challenges, on one hand, are coming from the banking industry. These are the common challenges faced by all banks. For instance, the low interest rates environment, they have been posing challenges to the banks, and also the challenges they brought to the urban development. Another factor I mentioned is that as the economic growth rate actually moderates, and also the whole society’s financing structure are experiencing changes, the credit demand also shrinks. This is also the PBOC had mentioned in the forum in Shanghai that the total loan growth demand, the loan demand, is also in a slow downtrend. For the second perspective, for CMB, we have also been quite special in our own loan structure. As you all know, we are a bank that retail business stays in our major line, and the extensive wealth management is a very important strength of ours.

In such a phase where retail credit assets, retail business, facing challenges, I believe this challenge, on one hand, is coming from the household balance sheet reevaluation and deleveraging. This is a phase, a special phase we have. For the second perspective, some of our households, they are having challenges in their willingness to repay and also their capability to repay. Thirdly, the joint stock risks also joint debt risk also demonstrate in such an environment. So for CMB, who boast retail business, are under pressure, much more pressure compared with our peers. So combined with the low interest rate environment, combined with our over 50% of retail loan among our all loans, and also the rather smaller room of liability-caused control compared with our peers, I think all these factors combining together are posing stronger challenge to CMB compared with other banks.

For us, I think on one hand, we need to follow the principle, the pattern of the banking business development. For us, I think that we should always stick to the philosophy, the customer-centric philosophy, to be back to our origin and take customer as our center. Secondly, we should balance risk, return, and maintain a good management over the two factors and stick to good asset quality. Third, from a commercial bank perspective, we need to combine with our own strengths, our resources, what we are good at. I want to specially mention the two points. One is that even though we are faced with challenges, how do we leverage our strengths in extensive wealth management business? We can consolidate our characteristics as a retail bank. We cannot give up our own strengths and characteristics just because of the change of external environment.

On the contrary, as the market changes, during the process, we should even more. We should even learn better about the environment and seize the opportunities and continue to foster our capability and grasp the development opportunities among the environment. Second perspective is that we have 3.8 million corporate clients and over 230 million retail clients, and we are having rather strong space to further dig deeper in these client groups. We need to take a customer-centric perspective to understand better about their demand, where is their demand, where is their pain point, and for CMB, we can understand better about them and provide corresponding service to these clients to match their need, no matter if they are retail clients or corporate clients, and to carry out our mission to serve the real economy. To serve the sense of fulfillment and their investment gains of our customers.

Of course, as a commercial bank, we should seize the pulse of this time to seize the trend of development and to seize what we should seize. To see from current situation, the senior management has discussed the following aspects, directions of development. These are also what we think that we should grasp and seize to be the characteristic of CMB’s future development. The first thing is extensive wealth management business under the low interest rate environment. How do we understand better about customer demand, their demand of preserve and increase their asset value? We also see the change of asset structure of every household of the Chinese residents. For the first half, retail AUM increased by 8% to CNY 18 trillion. We can see that in deposit, insurance, trust schemes, and mutual fund products, these are all demand coming from our clients.

For CMB, we have already accumulated a capability recognized by the market. For the next phase, we will further strengthen our capability to take customer as the center to increase the sense of fulfillment of our clients and to increase also the experience of our client. We take these aspects, our target, to enhance our capability of providing asset allocation to our clients, and also provide companion service to our clients as well. This is what I would like to discuss about the first capability. Besides retail, extensive wealth management also includes wealth management to corporate clients. Even though the scale of wealth management service provided to corporate clients is not as big as those we provide to retail clients, it is also growing at a very fast pace.

For the second perspective, I think we need to seize the opportunities arising from the new time and the new environment. That is SciTech finance. We think that under the backdrop where the government encourage us to develop technology and also the capital market are providing stronger support in this process. Of course, financial institutions like us should not miss this great opportunity. It is not just missing an opportunity, it may be a time that you miss. Of course, probably every financial institutions are also practicing and trying to seize this opportunity. How do we further consolidate our capability that is more systematic based on our past cumulative experience? I think on the one hand, we need to deepen our understanding towards industries. For every area in technology, it actually requires us to have strong knowledge, deep understanding in different areas, segments in the technology business.

How to further cultivate our capability, it is what we need to further dig deeper and cultivate, no matter in the head office or branch level or subsidiary. It is also building based on our professional operation that is industry-based. Only by understanding better about the future of a company could we deepen the development of technology finance. For the second perspective of how do we better promote the development of technology finance, we should give into full play of our full license capability. I understand that for commercial banking business, the high growth and also high volatile characteristics within technology finance, it cannot be satisfied by the traditional credit business model because the return coming from loan business is rather certain. I think that the two aspects within the business are actually mismatched. How do we better satisfy the demand of technology finance?

We need to further leverage our full license capability, our multi-license capability. That is what we need to think further for the next phase. We have one plus one plus eight license. One is commercial banking, and the other one is our overseas commercial banking, and the other eight are investment banking, investment management, AIC, leasing, and et cetera. For CMB, within these eight licenses areas, they are having a rather good market share and also market influence compared with CMB’s commercial banking business within its own area. I think we should fully leverage what we have been cultivating, what we have been accumulating, and to better serve our nation’s big strategy of developing technology. Within this trend, we should seize the opportunity and further development along with this trend. For the third perspective I would like to mention is that about our international development.

While logically speaking, our overseas branches are not having as many outlets as the big state-owned banks. How do we reflect our own characteristic in international development, especially how do we better leverage our Hong Kong institutions? I think that these two ideas are what we need to think further. The fourth aspect is that in the intelligent era also bring us new opportunities for banks. It might not be obviously or quickly reflected in our balance sheet or even at recent phases they will be reflected as expenses or cost, but for us, we think it’s the right thing to do. How do we use a more scientific way to grasp the intelligent technology meant a lot for a commercial bank.

It could help us to enhance customer experience, enhance our internal efficiency, and to conduct even more accurate risk management, and also to further accumulate our knowledge. This is for the development of technology has always been a very important input. Long ago, we have been written that no less than 3.5% of our operating income will become the IT input. For the next phase, this is written in our articles of association. We are having plan for developing our intelligent bank, and later on our Chief Information Officer, Mr. Zhou, will give further introduction. Last but not least, we believe it is also an opportunities given by this era. Also another mid-to-long-term momentum is that during the development of Chinese economy, we should better give the full play of our branches in key areas.

According to the senior management’s analysis for the first half, recently I’ve just report the pick-up of development of branches in key areas. They’re having a better growth rate in the average level of the bank’s all branches. We need to stay close to the local industrial policies, stay close to industries that are built into our understanding of risk and our preference, and stay close to our clients, including corporate and retail clients. This is what we need to do to further develop the branches in key areas so that they can contribute more to the bank’s operating income and also profit. For the next phase, we need to further foster our characteristics and strength so as to establish CMB’s own driver of future development. Your last question is about the growth of the first half. Will that trend be continued?

Well, to see from the senior management’s level, we will strive, we will make every effort, and this is also what we want to deliver to the market. We aim to strive to maintain a stable and steady progress to deliver such results to our market and make every effort.

Moderator: To maintain our good asset quality, to deliver such good growth momentum, to consolidate what we have achieved, to reflect better results to the capital market. Thank you. Next question, please. Next, we will invite Ma Kunpeng from China Securities. Thank you. I am Ma Kunpeng from China Securities. Thank you for President Wang for the introduction. We are clear about the strategic outlook. I want to further ask my question on retail banking business. CMB has the best wealthy retail customer base in China banking industry. In areas such as consumption scenarios, basic account services, wealth management, how will you continue to enhance the exclusivity, uniqueness, and premium experience of product and services to these clients, thereby avoiding simple price wars and marketing wars so that we can further improve customer loyalties and returns?

Wang Ying, Executive/Senior Management, China Merchants Bank: Is there any indicators or metrics we can track to monitor the progress and effectiveness of these efforts? We would like to invite Wang Ying to answer this question. Thank you for the question. I think this is a very good question. You not only pay attention to wealth management, but also pay attention to customer consumption scenarios, including bank account services, which are integrated financial services. This is a direction that CMB is paying efforts to serve the client’s basic need in deposit loans and remittance. Regarding these comprehensive financial services, we do not target only wealthy customers, but the whole customer base of China Merchants Bank deposits has been elaborated to the extensive wealth management. We will start from the client’s sense of experience. We select good products and construct a long-term, stable asset allocation system.

Regarding loans, which means we will satisfy client demand in different financing to provide the needs in households, business, et cetera. For remittance, we pay high attention and continuously enhance our basic account system construction, and dedicated to a safe, a convenient, and rapid payment system to cover all scenarios, such as elderly caring, social insurance, et cetera, so that client can use one account to manage all kinds of businesses. Make CMB card is very good to use this concept to be more widely promoted. Wealthy customers have more diversified requirements, and most of the clients are entering a phase of material wealth accumulation. So they have diversified from different dimensions. Their requirement has been wealth succession and wealth protection, and more advanced needs.

Under such kind of complexity, we have to take into consideration more factors and provide more customized services and more differentiated services to these wealthy clients. We provide one plus end comprehensive and scenario-based service solution, which is a one-on-one relationship managers and plus an expert teams for long-term companion to fully respond to the client’s expectations on integrated services. In product offerings, we would opt for all ground, all category product offerings that serves across multiple accounts and multiple currencies, et cetera. Golden Sunflower and above customers growth in the past three years has accumulated to 55%, and the CAGR has been 13.26%. Another point that I would like to discuss with you is that we have always paid high attention to the upgrade of retail client service model.

Because retail customers is a 100 million volume-based customers, and there are a lot of categories of retail banking businesses, and there are multidimensional services involved in retail banking client services. How to match clients’ requirements and our product offerings, this is a very important question. In the past, we used three years to basically complete the people plus digital intelligence new model in retail finance, and completed our digital rematching for clients and channels and product offerings. We have three dimensions to support us. First, our customer-centric value and our strong delivery capacity from the head office to branches and to sub-branches, as well as our strong support of FinTech. This is a main support. In the next phase, our retail banking service model will deeply involve artificial intelligence and transform from people plus digital intelligence to people plus AI Agent.

Regarding metrics, I think there are many indicators to pay attention to. For example, the number of customers holding wealth management products, the allocation customers, MAUs, active users, et cetera. The customers covered by our TREE system has increased by 55% for the past three years, and the compound annual rate has reached 13%. Our monthly active users has increased by 31% in the past three years, and 9.36%, and 5.14% of the CAGR of the past five years. As for the indicators, AUM and client base are the most fundamental indicators to look for. Structure volume of these indicators are also something worth paying attention to. Our AUM increased by 52.12% over the past three years, and retail clients increased by 24.5% for the past three years, and the CAGR was 6.72%.

Moderator: Overall speaking, we use integrated service capacity to serve our clients as long as we have our retail customer base, or even though their demand and preference changes across periods. However, for CMB, their trust for CMB and their choice for CMB will not change. Next question, please. Next, we will invite Xu Ran from Morgan Stanley. Thank you for giving me the opportunity. I am Xu Ran from Morgan Stanley. My question goes to Mr. Wang Xiaoqing regarding loan growth. We see that loan growth has slowed to below 5% year on year, and at the shareholders’ meeting you mentioned that the loan growth rate around 7% would be appropriate. What is the management’s long-term consideration on loan growth? Previously, we think that CMB is the retail-oriented bank, and in retail sector, we see that risks are accumulating. What are your considerations regarding future portfolio allocation?

Wang Xiaoqing, President, China Merchants Bank: Thank you for the question. Indeed, as you mentioned, and also mentioned in the presentation previously, the bank’s total loans and advances reached CNY 7.45 trillion, up by 4.73% year on year. In this process, we see that the difference between corporate loans and retail loans, the corporate loans increased by 13%, while retail loans increased by 0.05%, excluding corporate card. We are seeing corporate loans growth is outpacing retail loans. This is broadly in line with the market trend. You just mentioned the number 7%. This is mentioned in a previous investors discussion regarding our expectation, which is 7%. From actual operations, we think that currently is around 5%. In the next half of the year, we think that the growth rate would be relatively the same. There are two reasons. Firstly, the external environment.

The speed of loan growth is slowing down and the asset quality is improving. This is our own decisions. With insufficient credit demand in the market, especially the retail loans, is facing periodically high risk. We do not blindly pursue scale expansion. We emphasize the philosophy of a balanced development of quality, profitability, and scale. In recent period, what we discussed with the retail banking business sector is that we should. Regarding the retail banking structure and asset quality, we have increased our requirements, and we do not pay very high emphasis on scale expansion, so that our team of retail banking have sufficient attention on the asset quality of retail loans. Even though I believe that from many analysis, the Q2 growth is lower than the previous numbers.

From the perspective of commercial bank operation, we think that we hope to pay higher attention to the challenges and adopt long-term perspective, and conduct proactive management. Secondly, I would like to mention that about the low yield trade financing and LC negotiating business, the volume is shrinking, and we are implementing proactive management. The overall trend of demand is not changing very fundamentally. If we are not seeing very good signs of improving trend, the overall trend of CMB’s loan growth will still maintain. In terms of retail loans, we will continue to consolidate our quality customer base, effective control our risk, and then we can have a good market share.

Moderator: In terms of corporate loans, we focus on key areas, key industries, and key industries featured by six nets, so that we can achieve growth in both volume and quality, and increase our quality and effectiveness of serving the real economy. Thank you. Next question, please. Next question is from Yang Shuo from Goldman Sachs. Thank you for giving me this opportunity. I have a question for deposit. Recently we see that some major banks, they are resuming the issuance of a large denomination personal CD. I would like to learn that whether it has caused any influence to our liability cost, and I would like to understand the repricing of deposit and also the trend of NIM of CMB. The question will be taken by Mr. Peng. Thank you for your question. I think for the issuance of large denomination CD, we will have three purposes.

Peng, Chief Financial Officer/Senior Finance Executive, China Merchants Bank: One is based on the maturity management to the duration, to match the duration, and liability to absorb the long duration liability to maintain balance sheet management. Second, liquidity management, I think it is also the second purpose. The third purpose is relevant to provide the product and service for our client’s demand of having such kind of long-term deposit product requirement. Based on our understanding, five-year large denomination CDs issuance, the total size is limited and the cost is rather low. Based on our understanding, it will have limited influence on the bank’s NIM. For CMB, our liability duration is appropriate and balanced. In market risk, we don’t have quite strong requirements on the large denomination CD, and we have good liquidity. Temporarily, we won’t need the issuance of large denomination CD to supplement our liquidity.

Moderator: If in the future we need to take such action, it will be out of the purpose of providing relevant deposit products required by our clients. We will conduct further analysis and understanding that whether or not we have actual demand from our clients, and whether the demand should be satisfied by our product supply. So we are also doing such kind of analysis and research. Also for those products that was further relieved, we need to conduct some rollover product. We will also start from the perspective of NIM management and also from the perspective of liability management. I think the influence is rather limited. The next question is from Ma Tingting from Guotai Junan Securities. Thank you, senior management. I am Ma Tingting from Guotai Junan Securities. I have a question about the overall CMB’s asset quality.

Ma Tingting, Analyst, Guotai Junan Securities: What’s your point of view and what is the major risk?

Moderator: that you see, and what kind of coping tactics, measures that you have been taken to these risk areas? The question will be taken by Mr. Shi. He is in charge of risk management. Thank you for your question. For the first half of this year, we have stick to our prudent and stable risk management culture, and prevent the risk in key areas and increase our level of risk management. Our asset quality remain to be stable and having three characteristics. One is asset quality maintain stable towards a good momentum. By the end of June, our NPL ratio was 0.94%, remained flat from the end of 2025. This is quite a good level. The second is that we stick to a prudent and culture risk asset classification. Loans overdue for 60 days and 90 days to NPL was 1.23, which was a good level among our peers.

Shi, Chief Risk Officer/Risk Management Executive, China Merchants Bank: And third, we have abundant provision. By the end of June, under the group’s calibrate, our adequate coverage ratio was 385%, having a strong compensation level. You have been paying attention to our understanding of risk areas. I would like to make some classification according different segments. First, I would like to talk about corporate loan. For the first half, our corporate NPL ratio was CNY 27.4 billion. Corporate NPL ratio was 0.78%, down by 0.1 percentage point. Corporate asset quality actually improved. For the first half, the NPL formation ratio of corporate loan was just 0.16%. Stretching to see from a longer cycle, CMB’s corporate loan asset quality continue to improve, remain stable towards a good trend. For the risk areas that we pay attention to, in terms of corporate loan, the future risk will be lying in real estate credit perspective.

By the end of 2025, we have CNY 14.5 billion of NPL loan in the real estate area, which represents a 4.47% of NPL ratio. Even though these two figures remain at a relatively high level, we are paying a very cautious attitude towards these two figures. For the real estate market, we still see some divergence within the market. For some clients with rather not that good performance and qualification, they are having quite poor asset quality. For this area is what we pay special attention to, that is the corporate real estate. We are taking measures as follows. We continue to lower the proportion of corporate loan, corporate real estate loans within total loan. Its proportions was now 9.3%, which was lower than the end of 2025, lower by 0.45 percentage points. We will further optimize the structure of corporate property loan.

We focus on loan disbursement in Tier 1 and Tier 2 cities, and 85% of them are allocated to Tier 1 and Tier 2 cities. To see from client structure, over 80% of our corporate property loans are granted to local and central state-owned enterprises, and also very qualified private enterprises who are having stronger capability to paying their debt. The third perspective is to maintain strict management towards the projects. We have conduct close look bound management towards different projects. In the fourth perspective, we continue to dissolve the risk within the area and speed up the disposal, and enhance collateral, enhance guarantee, and enhance the other disposal methods taken by ourself.

Also, last but not least, to enhance our provision level to make sure that the risk compensation level within the corporate real estate sector is sufficient. The provision level is over three times than the average level of the provision for the corporate loan. Looking into the year 2026 with many policies introduced by different regulators, we are seeing that the real estate markets are seeing the trend of further concentrating in the risks. The risks tend to be showing a momentum to be contained. But we think that even though there will be some individual event of risk outbreak, but generally, the market is now in a stabilizing process. The second perspective I would like to mention is about retail loan. For the first half, the retail NPL loan amounted to CNY 42.8 billion. The NPL ratio was 1.16%, up by 0.1 percentage points.

Special mention loan ratio and balance of retail loan increased. I noticed that some of the investors are paying special attention to the asset quality of our retail loan, and from my perspective, the retail loan asset quality is the major driver, the major reason that influenced our overall asset quality, even though the asset quality indicators of the retail loans are maintaining at a relatively good level, but they are still under pressure. Second, retail loan accounts for a high proportion in our loan book. So it’s natural for us to having stronger pressure. Of course, some of the pressure is coming from the market trend. The other side, I think the pressure is also coming from the expectation from our investors and also CMB’s pursuit to be the best retail bank.

Currently, under such backdrop of the economic structure transformation and also the downward trend of the real estate market, clients are under influence in terms of their capability of repay and also their willingness to repay. Also we are having joint debt risk in the consumer loan area. We are still having the idea that the retail loan risk is in an upward trend. Of course, we have been taking measures to maintain the risk level of retail assets. What we have been doing is that we have adjusted our budget and target of retail loan business, and in our evaluation and also internal encouragement, we even pay special attention to the quality of retail loan and also control the formation of retail NPL loan. Of course, we also see some positive signals within retail loan asset quality for the first half.

Excluding credit card, our retail loan, we are having new formation of 247 million, new formation of personal loan. That is retail loan excluding credit card. Retail credit assets, the momentum of its NPL new formation momentum has been curbed. The second signal we see, our balance loan, that is our mortgage loan for the first half of this year, the NPL balance was down by 549 million and down by 0.03 percentage points and realized the both decrease in the NPL balance and ratio of our mortgage loan for the first half of the year. Of course, good signals are also showing in credit card business. Due to some special reasons, the adjustment of the asset classification within the credit card business, we have been taking stricter measures to conduct asset classification so that we see some uptick in the formation of credit card NPL.

Overdue loan ratio was down by 0.1 percentage point in credit card business for the first half. Overdue loan ratio and balance also both decreased in terms of credit card loan. Of course, we have to admit that the credit card assets are still under pressure in terms of asset quality, but I believe it still be a very important loan granting direction for us to pursue. In the following phase, we will follow the market trend. We will emphasize both on quality and size, and we will give the full play of the strength of our customer base to increase the threshold of customer onboarding. Third, we will dig deeper into our existing customer base and to prevent the risk coming from joint debt risk. Fourth, we will conduct early identification, warning, and also disposal and etc.

Fifth, we will enhance our systematic risk management capability to strengthen the leverage of AI or data, and also to strengthen the cultivation of our talent team. We will further strengthen the management over the asset quality of retail assets. We wish it would be developing in a stable momentum.

Moderator: Next question, please. Next, we will invite Min Lee from JPMorgan for the questions. Thank you for giving me the opportunity. My question is regarding corporate banking business. We noticed that corporate banking revenue and profit are outperforming those of retail banking. What are the growth drivers and what is the outlook going forward? Under today’s macroeconomic situation, how can we maintain good corporate loan asset quality? Thank you.

Thank you for the question. We will invite Mr. Lei Caihua, who is in charge of corporate banking business to answer this question.

Lei Caihua, Corporate Banking Executive, China Merchants Bank: Thank you for the question. You mentioned about the growth of corporate banking in the first half of the year. Overall speaking, our growth is stable. Due to, in the backdrop of the market environment, we have four growth pillars, we have achieved good operating results. In the past decades, corporate banking operation has formed differentiated advantages as compared with our peers. The key lies in the number and quality of our customer base, as well as our client experience and clients coverage regarding our digital products. The aforementioned two points generate three points. Our cost of liabilities is outperforming our peers. Our investment banking and cross-border finance business is featured and satisfied our clients’ needs and thus generating non-interest incomes. Fifthly, the fourth pillar growth drivers of CMB corporate banking, especially wealth management, asset management, interbank coordination, has jointly formed a growth.

Sixthly, our good asset quality. Next, China Merchants Bank will continue to, in terms of corporate banking, we will focus on the six aspects to forge our differentiated advantages. Firstly, leveraging digital empowerment, we will further strengthen our client service system. Currently, the classification and segmentation based client operational model will be continued, and this is a core for our customer base operation. We will enlarge our clients’ loyalty and increase our income and low cost liability. Compared to peers, we have a better advantage in the volume and quality of our client base. For technology evolving growing clients, we should address their needs in operations and become a principle bank for the clients. Next, in terms of operation, we need to continue to optimize our services. Secondly, to improve our professional operation capacity and increase our asset originations.

In terms of, we are focused on the new emerging quality clients and sickness clients, et cetera. We will have specific industrial investigations and improve our risk investigation and forward-looking judgment on their demands and impose differentiated credit policies so that we can obtain asset allocation, which is with controllable risks. We also strengthen to build industrial ecosystems. We have already covered 36 industries of professional investigation. Thirdly, we will improve our investment banking and commercial banking integrated service systems. First, we would improve our digital products, including cross-border finance, investment banking, transaction banking, et cetera, so that we can enhance customer experience. In terms of customer experience, we are leading the industry, and we should maintain our advantage so that we can deepen our client loyalty, know better our clients, and forge stronger ties.

Leveraging high efficiency synergy, we will forge a capital ecosystem to provide our clients with more diversified products and increase our M&A financing and direct financing, increase our FPA to improve our income. Next, we will improve cross-border finance business management. Serving Chinese enterprises growing global. In terms of customers of BOP value, cross-border financing, as compared with our comparable peers, we are leading in our position. Next, we will improve our synergy capacity in cross-border institutions so that we can help the Chinese enterprises going global, help their products going global, and investment and financing going global so that we can provide better services for these clients. Quickly, we would increase the coordination between the four major business segments. The coordination of these four segments are the feature of CMB, especially the development of growth management business, as well as the other segments.

Moderator: By leveraging this coordination, we can achieve steep cooperation of these different client categories. Next, we will continue to forge differentiated processes and mechanisms. Sixthly, we will use AI to empower our business. Firstly, we want to increase our response speed to our clients and increase our risk management capacity and internal operation efficiency, as well as integration and synergy capacity. That is my answer. Thank you. Next question, please. Next, we would invite Wang Xianshuang from Guolian Securities. Can you hear me? Yes. Thank you. I am Wang Xianshuang from Guolian. First of all, thank you CMB for delivering stable performance. Under such kind of circumstances, you have good performance in operation results and see an increase in market price in H share and A share. My question is regarding asset and liability. I want to ask the management, what is your outlook on the NIM trend?

The second is about FinTech. We noticed in the interim report you elaborated a lot on AI, and we believe CMB is leading the industry in AI deployment. The market, it is not having very direct feeling of the AI application. Is there any tangible impacts on the business? Can you give a few examples so that we can have more concrete feelings? Thank you for the question. First, we will invite Mr. Peng to answer the question. For the second question, we will invite Mr. Zhou for the answer. Thank you for the question. Regarding NIM changes, this is a heated topic of the market. Since this year, in the banking industry, the NIM is becoming stable. However, there are some divergence in this regard. In some banks, we are seeing a rebound, but the others, we are still seeing decline. As for CMB’s perspective, currently, we are still declining.

Peng, Chief Financial Officer/Senior Finance Executive, China Merchants Bank: However, the decline is rapidly narrowing. In the first half, the NIM was 1.83%, down 5 basis points year-on-year. As Q2 compared to Q1, 1 basis point lower. We are declining, but the decline is narrower, and it is being stable. As for CMB, we think that the main factor lies in asset side. First, the repricing factors have from being fully displayed. This is a common factor impacting all the banks. We are also facing insufficient credit demand, which drive to the downturn of asset pricing. Secondly, for China Merchants Bank retail banking, especially credit card banking asset, has a high proportion. Under current circumstances, its asset has been slower in growth, so posing pressure on our NIM decline. I think for CMB, there are common factors as well as factors that is applicable for CMB.

Overall speaking, no matter how different each bank changes in their NIM trends, we can come to a conclusion that the NIM is facing less pressure of decline and gradually rebouncing. For the banking industry in the future, we are still facing pressure of further decline in NIM. The main factors also include, there hasn’t been a very clear turning point of insufficient credit demand. In terms of deposit repricing, it is basically finished. Therefore, this downturn of cost of liability has been slowed down as the impact on NIM. In terms of asset quality, in terms of property assets, it hasn’t been fully recovered. So we are not seeing very rapid rebounds in this area. In terms of NIM, we are still facing pressure. From my personal point of view, the most difficult time for NIM decline has already passed.

We are also faced with many preferential factors. For example, under the current macro economy, especially our good monetary policy, scientific monetary policies, as well as the application for reasonable competition, our competition will be more reasonable, which is a good factor for our NIM. Secondly, loan repricing is expected to finish within the year. If there isn’t large amount of rate cuts, we think that lower pricing is also turning gradually stable. So my point of view is that although we are facing a certain extent of pressure in NIM, we will gradually enter a phase which is more stable. CMB will continue our management of asset liability and make good arrangements in asset structure. For example, on the premise of good asset quality, we will promote the reasonable growth of retail credit loan, and promote a growth of retail loans which is considered appropriate.

We will strengthen cost management for liabilities. In terms of deposit, we think that quality is more important than volume, so that we can contribute more to the stabilization of NIM. In the beginning of the year, we raised three targets. First, to narrow the decline of NIM, which I believe can be done. Secondly, maintaining market leading position, and we are confident about that. Thirdly, we strive to achieve stability in NIM. Thank you. I will answer the second question. Intelligence transformation is the trend of the time and also an opportunity for CMB since 2024. We have leveraged AI to help CMB transformation. We have intensifying our efforts in that regard. In our employees’ daily workflow, AI has been implemented and playing effect. The working items we identified with AI empowerment has been over 1,000.

Zhou, Chief Information Officer, China Merchants Bank: We have achieved 13.88 million equivalent employee working hours contributed by AI. AI has been playing its effects spanning front, middle, and back offices. You mentioned that you hope to learn about what are the specific influence to our businesses. I want to give you two examples. One, our Golden Sunflower client operation. Currently, RM Assistant is playing good effect of AI for Golden Sunflower RMs. We are also seeing that for all of the bank wide relationship managers for Golden Sunflower clients are using AIs and achieving possible impacts. In the first half of the year, the average effective outreach cost per RM increased by 14.65%, with average transaction value per client increased by 35.82%, generating good effects. In terms of corporate credit, currently 90% of the content in the due diligence reports for small business can be generated assisted by AI.

In the in-lending stage, AI can help with extraction of key information and assisted decision. The average service time reduced from 36 hours to 2.72 hours. The tender guarantee can be issued within minutes. The adoption rate of AI monitoring results for loans has been 68%, and the RMs can resolve risks in advance, and the alert triggering time has reduced by 45 days as compared with traditional mode. Currently, on the basis of China Merchants Bank 15th 5-Year Strategic Plan, CMB has more specific and detailed arrangements regarding AI empowerment and impose a high target. We are having full range deployments regarding this area. Thank you. Next question, please.

Mei, Analyst, UBS: Next question is from Mei from UBS. Thank you, senior management, for giving me this opportunity. I am Mei from UBS. I have a question about the dividend payout ratio, the dividend policy. We can see that the state-owned banks, they increased their interim dividend payout ratio by 1 percentage point from 30% to 31%. While for CMB, you maintain that a 35% level. However, under such environments, will CMB consider to further increase your dividend payout ratio? For your corporate loan business, you have seen quite good increment. Will that consume a lot of capital? In the future, how do you plan your capital position and the RWA development? Thank you. Thank you for your question. For China Merchants Bank, our dividend payout event, we have been authorized by the shareholder meeting and also the board of directors. We have a rather corresponding arrangement.

Peng, Chief Financial Officer/Senior Finance Executive, China Merchants Bank: We understand that the capital markets has been paying special attention to this matter. We have also communicate with our investors to understand better about the capital adequacy ratio and also the RWA growth rate and capital position. At the end of June, we have held a shareholder meeting. In answering a question about our market value arrangement, we have provide relevant answers. We will, based on our capital adequacy ratio, to coordinate the asset growth, the asset return, and the financing of capital, and also dividend payout management, and also the market recognition, and to finally realize two target. One target is the risk remain under control for the bank’s operation, and for the second perspective, to value investors and shareholders requirements, their demand, and provide return, and provide value creation for our shareholders.

Our mindset and the efforts we made are also based on what we have listened to our investors and shareholders. Based on these consideration, we have making plans in our RWA growth, in our capital adequacy ratio and dividend payout ratio. We have always followed one principle, that is to balance the development of both light and heavy assets, and also arrangements. Under such guidance, I think we can understand this matter from four perspective. One is to guarantee the enhance of our return, to optimize the allocation of our resources, enhance the utilization rate of our capital. Second, scientifically manage RWA growth rate. It means that we need to be more efficient in using our capital and reduce the idle occupation of capital. Third is what we have always been adhering to, that is the internal generation of our capital, endogenous generation of our capital.

Fourth is the recognition given by the market of the value of a valuation of CMB. To maintain our good market image, to make sure that we can have a better market valuation and deeper recognition from the market. We have multidimensional consideration and thoughts. We will take full consideration of the opinions from every perspective, from investors, from analysts. They are also serving as very important channel of comments. We should also be aligned with our own operation. Thank you for your question. Next question, please. Next question is Gary Lam from HSBC. Hi, senior management. I am Gary from HSBC. I have a question about fee income and AUM. We see that your fee income increase accelerates in the second quarter. Will that trend continue for the next half?

Moderator: Your retail AUM reported quite fast growth rate, which was annualized to 15%, faster than the deposit growth rate. I would like to understand what is the underlying reason behind, what is the underlying driver of these phenomena. At the same time, we see that in the wealth management income, the driver has been changing. Mostly they are driven by the agency distribution of mutual fund and wealth management products. Less from bank insurance products. In terms of future developments, could you leverage the growth from mutual fund and wealth management product to offset the decline from bank insurance? Thank you very for your question. It will be taken by Ms. Wang Ying. For the first half, CMB’s AUM has growing at a good pace, hitting a record high of CNY 1.63 trillion, 7.96%.

Wang Ying, Executive/Senior Management, China Merchants Bank: The wealth management products are giving a full play, and we have also seen new growth drivers in the structure. Non-deposit AUM accounts for a higher proportion, excluding the third-party market value. So 85% of the growth are coming from non-deposit assets. I think that is highly relevant to the high growth rates of our equity-related products. For instance, mutual fund, third-party depository payments, trustee, and et cetera. They have all realized quite good growth and also bring us the change in the structure of growth. Of course, in customer base, we also see good performance in the both Golden Sunflower and Above customers are having higher AUM growth rates compared with the same period of last year, and also that the average level of all customers. In wealth management scenarios, for instance, pension, cross-border business scenarios, we also see faster AUM growth.

In income contribution, wealth management relevant AUM yield has created better return compared with other type of products. You just asked us what is the underlying logic behind our AUM growth. I would like to conclude in the following aspects. I think it is relevant with CMB’s capability that we have long accumulated in terms of wealth management capability. It contains three tiers. That is to provide both product and policy products. The second is customer relationship managers and also our wealth management consultant and investment consultants. They are forming a team to provide combined allocation service to our clients, and third, our long-time convenient service we provide for clients. For us, we understand that AUM growth is not just relevant to wealth management business. It is more relevant to all retail banking business. It is also closely relevant to settlement and payment.

Our debit card, our credit card, whether it is of good use, whether it is safe, whether it is convenient, whether it is the first choice for our users. For our clients, they might not be using CMB for purchasing wealth management products only. They also would like to make transactions within CMB. They would like to use the CMB account to be the principal settlement and payment account. They are willing to buy wealth management products within CMB. They would like to use credit cards with CMB. They would like to use debit card with CMB. I think behind the AUM growth, indicators could not be seen or analyzed isolatedly. They are working with each other as a whole.

As I answered the last question, the most important thing is we have a strong support of such a large customer base, such a large talent team, and such a diversified channels. How do we leverage a strong technology infrastructure to break the silo among different database? This is very important for us to provide a very smooth service to our clients. AUM growth, income growth, could we maintain such high speed? For us, CMB’s AUM structure is quite light. It is very capital market oriented. Wealth management business are accounting for a high proportion of this business. It is quite hard for us to say that we can maintain a very high-speed growth because it is highly relevant to the capital markets, the development, and transaction itself. For a long period of time, we will continue to maintain our growth speed. Next question, please.

Moderator: Next, we invite Zhang Shuaishuai from CICC. Thank you for giving me the opportunity. I am Zhang Shuaishuai from CICC. My question is regarding management. Previously, when senior management is doing roadshows, you mention synergy a lot. This is a very important concept because currently the market is limited and many banks or institutions are seeking profitability from management. By various metrics, CMB is a leader in synergy. I want to ask the management, how does management achieve effective synergies across business lines, among branches or subsidiaries, not just in words, but in practice, how to maximize cost and resource efficiency? That is my question regarding management and synergy. Thank you for your attention on synergy. This is a question that I would like to address on.

Peng, Chief Financial Officer/Senior Finance Executive, China Merchants Bank: As you mentioned, on every level of CMB, including our subsidiaries, between branches, between head office and branches, across business lines, we have achieved good results in synergy. There are a few supporting factors. There are five perspectives. Firstly, we have set up a mechanism for synergy. For example, regarding cross-institutional synergies, we have designed the dual attribution and shared rewards mechanisms. This design is helpful to the effect of synergy. Secondly, the design of performance-driven incentives. In our assessments, we have put in the assessment and give a great attribute to synergy. For different institutions and head office departments, we have given assessment indicators for synergy. Thirdly, model innovation. An institution needs a mature model for synergy. We have a mechanism incorporating investment banking, private banking, commercial banking, scientific research, et cetera. Based on this very effective model, different institutions can have good collaborations. Fourthly, a corporate culture.

Synergy is not a task that is promoted with administrative forces, but a corporate culture that is internalized into the bank. Many different business lines and institutions will proactively embrace the concept of synergy in CMB. This is my feeling. The fifth point is about organizational enablers. Our organization structure is beneficial to the operation of synergy mechanism. Many departments, many structure designing is based on a consideration of synergy. For example, we have set up a synergy committee bank-wide, and President Wang Xiaoqing is the head of the committee, so that we can promote synergy via organizational structure. I think the above mentioned five perspectives are a very good and very important factor to promote successful synergy within CMB. Apart from the five mentioned perspectives, there are also two extra factors.

Firstly, we adhere to and pay high value to the synergy concept, including the board of directors as well as our senior management. Each CMB employee would have such kind of concepts in mind. Secondly, our data system and system design is a good support to the measurement of synergy effects, and which contributes to the performance incentives. This is very important for a synergy mechanism building. So we have top-tier awareness and fundamental technical system support. This is my answer to your question. Thank you. Thank you, Mr. Peng. Due to time constraints, we will now take the final question. To ensure the rights of individual investors, we have collected questions from individuals as most of them overlap with the questions we just mentioned. Now, I would like to choose one representative one for answer. Now please read out the question.

Wang Xiaoqing, President, China Merchants Bank: The question is: “The country is encouraging commodities and enterprises going global. CMB began its internationalization efforts 20 years ago.” My question goes to Mr. Wang. What is the future direction of CMB’s international development strategy? Are there any adjustments compared to the past? Are there any specific targets for international development? Thank you for the question. International development is an important component of CMB’s 15th Five-Year Strategic Plan, and also one of the transformation initiatives of our core initiatives. Regarding the background of internationalization, one of them is the Chinese enterprises going global, and also the international development of the renminbi. Another factor is the periodical interest rate gap between domestic and international interest rates. Some enterprises can benefit from the pricing gap. China Merchants Bank pay high attention to international development.

In terms of global presence and development presence, we have one subsidiary bank in Hong Kong and CMB International, and we have six overseas branches. This is our overseas presence. When I mentioned about the growth drivers for the medium and long term, I also mentioned international development. In terms of global presence, we do not have as much business presence, business outlets as compared to the large state-owned banks. We have to adopt practical measures. What we hope is that we can better serve Chinese enterprises’ global operation. Especially, we hope to do well in cross-border financial services to these clients. We also serve the foreign enterprises who are having their presence in China, leveraging our cross-border finance service system. Even though we do not have as many business outlets globally, cross-border finance of China Merchants Bank has formed advantage for China Merchants Bank.

Many clients have given us feedback that our cross-border finance team is very professional and have delivered very responsive services. We hope to consolidate these advantages. We will fully leverage the current institutions we have. In the working conference for the first half, our development pattern will be the one plus one plus five development. First one is head office, which is the strategic guidance, and the other one is our institutions in Hong Kong, which is a very important business hub for us in Hong Kong. The number five represents New York branch, Sydney branch, Luxembourg branch, and Singapore branch and the others, which forms the five major overseas business institutions. They are serving as the regional hubs of our overseas business. Institutions in Hong Kong is the China Merchants Bank Global Custody Hong Kong Center, Communications Center, and other business centers.

CMB will continue to increase resource input in that regard. In the past, we have served a lot of companies with global presence and accumulated experience. In the process of serving these clients, we have also increased our capacity, our tech capabilities, and experience. So we will further serve these companies who are the lighthouse companies to improve our product offerings and accumulate capacity and experience from the lighthouse enterprise and leveraging this experience to serve more clients. Thirdly, bank-wide, CMB will cultivate more and more international talent team. Fourthly, we will make full use of our partner channels, like agent banks, so that we can build an express highway that connects the major financial institutions globally. More importantly, I think we need to improve our capacity in risk recognition capability. As for CMB, we continue with conducting our operation within the boundary of our capacities.

Moderator: We will continue to build up our capacity, but we will not do businesses outside the range of our capacity. That is my answer. Thank you. In the interest of time, we will conclude the meeting here. This is the end of the meeting. If you hope to learn more about the details, you can go to CMB official website for the interim report of CMB. If you hope to get further explanation of detailed questions, you are welcome to contact CMB IR team for further communication. Thank you again. Goodbye.

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Earnings call transcript: China Merchants Bank posts mixed H1 2026 results By Investing.com

Key Takeaways

Company Performance

Financial Highlights

Earnings vs. Forecast

Market Reaction

Outlook & Guidance

Executive Commentary

Risks and Challenges

Q&A

Full transcript – China Merchants Bank (3968) Q2 2026:

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Key Takeaways

Company Performance

Financial Highlights

Earnings vs. Forecast

Market Reaction

Outlook & Guidance

Executive Commentary

Risks and Challenges

Q&A

Full transcript – China Merchants Bank (3968) Q2 2026:

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