China Construction Bank Corporation, 2023 Earnings Call, Apr 02, 2024 - SEHK:939

SEHK:939

Liurong Sheng [Chief Financial Officer] 💬

Liurong Sheng, the Chief Financial Officer of China Construction Bank Corporation (CCB), made several announcements and comments during the 2023 Earnings Call on April 2, 2024. Here’s a detailed summary of his statements:

Opening Remarks:

Welcomed investors, analysts, and media representatives to the CCB 2023 Annual Result Announcement.
Mentioned that the event was being held simultaneously in Beijing and Hong Kong via video link, with an online platform open to all investors and the public.
Introduced the attendees, including senior executives and independent directors.
Noted that the annual results had been officially released on March 28, 2024, and were available on the company’s website.

Chairman's Speech Introduction:

Introduced Chairman Zhang Jinliang, who would give a speech followed by a Q&A session.

Q&A Session:

Provided operator instructions for the Q&A session.
Passed the first question to a participant in Beijing.
Passed a question to Hong Kong.
Passed another question to Beijing.
Passed another question to Hong Kong.
Passed another question to Beijing.
Passed another question to Hong Kong.
Passed the last question to Beijing.

Closing Remarks:

Acknowledged the detailed and interactive session.
Invited participants to contact the IR team and the Board Secretary Department for further questions.
Thanked everyone for attending and wished them good health.

Throughout the earnings call, Liurong Sheng facilitated the proceedings, introduced speakers, and managed the flow of questions and answers. He did not provide extensive commentary on the financial results or strategy, instead focusing on the logistics of the call and ensuring that all participants had the opportunity to engage with the CCB leadership.

Jinliang Zhang [Chairman of the Board] 💬

Jinliang Zhang, the Chairman of the Board, delivered a comprehensive overview of China Construction Bank Corporation's (CCB) performance in 2023 and outlined the bank's strategic directions and priorities for the future. Below is a detailed summary of his remarks:

Overview of 2023 Performance

Financial Highlights:
- Total assets amounted to RMB 38.32 trillion.
- Total liabilities amounted to RMB 35.15 trillion.
- Net profit for the year was RMB 332.46 billion, representing a 2.34% year-on-year increase.
- Key financial ratios include:
  - NIM (Net Interest Margin): 1.7%
  - ROA (Return on Assets): 0.91%
  - ROE (Return on Equity): 11.56%
  - NPL (Non-Performing Loan) Ratio: 1.37%
  - Provision Coverage Ratio: 239.85%
  - Capital Adequacy Ratio: 17.95%
Strategic Focus:
- Adhered to Xi Jinping's Thought on Socialism with Chinese Characteristics for a New Era.
- Implemented the spirit of the 20th CPC National Congress, the Central Financial Work Conference, and the Central Economic Work Conference.
- Carried out the new development concept and focused on business operation performance and risk.

Strategic Directions

Main Responsibilities and Business:
- Improved the quality and efficiency of serving the real economy.
- Promoted the integration and development of three business sectors.
- Strengthened lean management and built a more agile and efficient operational foundation.
Risk Prevention and Resolution:
- Focused on risk prevention and resolution in key areas.
- Expanded and upgraded the intelligent risk control system.
- Maintained the risk bottom line and built a financial safety net.
ESG Integration:
- Integrated ESG (Environmental, Social, and Governance) into bank-wide operations and management.
- Shared diversified values, helped improve people's livelihood, and promoted low-carbon transformation.
- MSCI ESG rating upgraded to AA.

Future Outlook

Strategic Transformation:
- Continued to focus on five major areas:
  - Transforming CCB's first-mover advantage in technology, inclusive financing, and pension into leading advantages.
  - Constructing a new competitive advantage for CCB in the digital economy era.
Foundation Strengthening:
- Strengthened the foundation, focusing on fundamental, long-term, and systematic issues in development.
- Incorporated link management into customer operations, business processes, risk management, and resource allocation.
Prudent Integrity and Innovation:
- Carried forward CCB's fine tradition of prudent integrity, innovation, and pioneering.
- Promoted a financial quarter with Chinese characteristics.
Value Creation:
- Created value for customers, shareholders, and stakeholders in a sustainable manner.

Financial Strategy

Asset Structure Optimization:
- Maintained steady growth in total credit volume.
- Paid more attention to revitalizing existing assets and structural adjustment.
- Did a good job in asset allocation and continued to reduce inefficient assets.
- Strived to keep the net interest margin at a comparable leading level in the industry.
Liquidity Quality Enhancement:
- Upgraded the capacity for taking corporate funds.
- Set measures to stabilize and increase deposits.
- Managed the quality of liabilities and enhanced the stability and diversity of liabilities.
- Better matched liabilities and assets.
- Actively acquired liabilities and kept the cost of liability at a reasonable level.
Capital Quality and Efficiency Improvement:
- Tapped into the potential of own capital.
- Strengthened the transmission of capital pressure.
- Adhered to the balanced development model of volume, price, risk, and capital.
- Saw opportunities from new capital regulations and continuously improved the efficiency of capital utilization.
Income Quality Improvement:
- Respected the pattern of operation and adhered to commercial sustainability.
- Strengthened lean pricing management in asset-liability and stabilized the basic net interest income.
- Insisted on creating value through services, cultivating new momentum of intermediary businesses.
- Enhanced the contribution of non-interest income and maintained the leading level of profitability and core indicators.
Cost Effectiveness Improvement:
- Conscientiously implemented the important instructions of General Xi Jinping to insist on doing everything diligently and thriftily.
- Improved output and operational efficiency.
- Kept the cost-to-income ratio at a reasonable level.

Shareholder and Customer Focus

Shareholder Rights and Interests:
- Paid attention to safeguarding the rights and interests of shareholders, especially small and medium shareholders.
- Distributed cash dividends of RMB 0.4 per share for FY 2023, totaling over RMB 100 billion.
- Maintained a stable dividend capacity due to a high level of capital adequacy ratio among domestic and foreign banks.
Customer Focus:
- Safeguarded the legitimate rights and interests of customers.
- Actively responded to customer and investor concerns.
- Incorporated ESG into strategic decision-making and operation management.

Conclusion

Sustainable Development:
- Strived to become a world-leading sustainable development bank.

Unknown Executive [Executives] 💬

** Key Points Mentioned by Unknown Executive**

Pension Financing
- CCB established a group-level pension fund leading team in June 2022 and built a system for 1314 pension financing services.
- By the end of 2023, pension card issuance exceeded 700 million cards.
- Pension fund under asset management exceeded RMB 500 billion, and the investment scale exceeded RMB 100 billion.
- The opening account number for individual pensions has exceeded 10 million.
- CCB is expanding its pension business and working with partners in the pension area.
- CCB is focusing on creating value for citizens and building innovative pension products.
- Dedicated branches and community-based micro-ecology for pension finance are being developed.
- Expanding coverage to benefit more citizens, especially those not included in general pension systems.
- Strengthening comprehensive service capabilities and the silver economy to enhance pension business.
Asset Quality in Inclusive Finance
- Despite market pressures, the asset quality in inclusive finance remains under control and better than the average level of corporate financing.
- Policy execution, especially deferred payment of interest, has been managed to mitigate risks.
- Loans for micro and small businesses decreased by 90% compared to the beginning of the year, and existing loans are only 0.2% of the total loan balance.
- The impact of the policy allowing SMEs to defer payments is limited and under control.
Rural Revitalization
- CCB has created the Yunongtong financial service package with 300,000 offline service entities and a mobile application offering smart rural business, e-commerce, administrative services, and financial services.
- Issued 30 million special credit cards for rural revitalization, with an increase in loans of RMB 80 billion.
- Created a service package for villages and a product package for rural entities, resulting in total agriculture loans of RMB 3.82 trillion, an increase of RMB 810 billion.
- Developed professional scenarios for agricultural-based business and industry verticals, including pilot projects in Shandong, Hubei, and Fujian.
- Facilitated rural governance with a system for transactions and credit rating in rural areas.
- Strengthened risk management in agricultural loans, with a focus on risk warning and control measures.
- Rural revitalization business has driven agricultural loans and other financial business, supporting county-level business growth.