Bank of China (601988:SSE) Q3 2026 earnings call transcript

Ladies and gentlemen, investors and netizens, hello! Welcome to Bank of China's Third Quarter 2026 Results Presentation. This activity is hosted by Bank of China Limited and supported by the network platform provided by Shanghai Stock Exchange Information Network Co., Ltd. Thank you for your attention and participation. On October 31, Bank of China Limited published the 2026 Third Quarter Report. Investors may log in the website of Shanghai Stock Exchange (https://www.sse.com.cn/) or this platform (https://roadshow.sseinfo.com/) to view the relevant announcements.

In order to facilitate investors to have a more comprehensive and in-depth understanding of the company's operating results and financial situation in the third quarter of 2026, the company decided to hold the Bank of China's third quarter performance presentation in 2026. In today's event, the main members of the management of the Bank of China will visit the Shanghai Roadshow Center and communicate with investors. Everyone is welcome to participate actively. First of all, let's welcome guests from listed companies to make opening speeches.

Dear investors, Hello, everyone! Welcome to the Bank of China's performance presentation for the third quarter of 2026. Thank you for your long-term attention and support to the Bank of China. At the same time, thank the Shanghai Stock Exchange and the Roadshow Center for providing an investor exchange platform for listed companies. This year marks the 20th anniversary of the listing of the Bank of China. After 20 years of continuous operation, the Bank of China has stepped out of the new road of high-quality development of modern corporate governance, global operation and comprehensive transformation.

The scale of assets has increased by about 8 times, and the number of countries and regions covered by overseas institutions has expanded from 27 to 64, thus achieving a leap from large to strong. It has maintained steady operation and healthy development in many economic cycles.

Since this year, the Bank of China has adhered to the implementation of the decision-making and deployment of the Party Central Committee and the State Council, fully, accurately and comprehensively implemented the new development concept, helped to speed up the construction of a new development pattern, actively improved the quality and efficiency of the service entity economy, adhered to the new, excellent, good, strong, stable and intelligent development, and achieved steady business performance. Lay a solid foundation for a good start of the 15th Five-Year Plan.

Our bank has published the third quarter report of 2026 on the website of Shanghai Stock Exchange and the official website of our bank on October 30. You can download and browse it. Today, I will communicate with all investors online. Welcome to participate actively. I hope you will have a better understanding of the Bank of China and have more confidence through the exchange. Thank you!

The Bank of China has long been the "dividend benchmark" of the A-share market. Against the background of a steady increase of 5.53% in net profit in the first three quarters of 2026, is the company confident that it will continue to maintain or even increase the cash dividend ratio in 2026 in order to fulfill its return commitment to the long-term accompanying minority shareholders?

Dear investors, hello. Thank you for your question. With regard to your concerns, I would like to briefly introduce the performance of Bank of China in the first three quarters. Since the beginning of this year, the Bank of China has persisted in developing towards innovation, excellence, improvement, strength, stability and wisdom, and has achieved positive results in its business development.

First, the financial benefits are steady and progressive. First, business income has maintained a relatively rapid growth. In the first three quarters, the Bank achieved an operating income of RMB526.8 billion, representing a year-on-year increase of 7.05%. Looking at the long cycle, since the third quarter of 2024, our bank's revenue growth has maintained positive growth for nine consecutive quarters. In particular, net interest income was RMB359.6 billion, representing a year-on-year increase of 10.38% and an increase of 0.18 percentage point from the first half of the year.

Second, the profit growth quarter is higher. Profit after tax and profit attributable to shareholders of the Bank were RMB199.2 billion and RMB187.5 billion, respectively, representing a year-on-year increase of 5.09% and 5.53%, respectively, and the growth rate was 0.42 and 0.43 percentage points higher than that in the first half of the year, respectively, achieving a "quarterly high" since 2025.

Third, the net interest margin stabilized. The net interest margin remained at 1.27%, stabilizing for five consecutive quarters since the second quarter of 2025. Second, growth resilience continues to be highlighted. The Bank solidly promoted the expansion of customer account base, continuously optimized the product business layout, expanded the wealth management business, optimized the settlement and clearing business, and strengthened the global custody business, and the net fee income continued the steady growth trend since last year.

We effectively responded to the operational uncertainties brought about by the increased volatility in the financial market, and achieved steady growth in other non-interest income on the basis of the high base of the previous year. The Group continued to promote cost reduction, quality improvement and efficiency enhancement, resulting in a year-on-year decrease of 1.18 percentage points in the cost-to-income ratio and further improvement in operational efficiency.

Third, increase and improve the quality of credit. The supply of credit resources continued to develop, actively serving the construction of "dual", "two new" and "six networks", and the balance of domestic manufacturing loans and strategic emerging industry loans increased by 16.39% and 17.32% respectively compared with the end of last year. Fully support the expansion of domestic demand, promote consumption, make full use of all kinds of discount policy tools, related business scale is in the forefront of the major industry.

In the process of serving the development of the real economy, we should continue to do a good job in the comprehensive balance of "quantity, price, risk and effect". Fourth, the characteristic advantages continue to be highlighted. The Bank insists on taking globalization as the core and primary task of the Group's development strategy, continuously improves its global layout capability and international competitiveness, and maintains a high level of profit contribution from overseas institutions. Cross-border RMB settlement and clearing continues to lead the world, and the scale of overseas custody and cross-border custody leads the market.

Fifth, the risk provention and control is solid and effective. We will continue to strengthen asset quality control, steadily promote the resolution of non-performing assets, and improve the quality and efficiency of collection and disposal. The non-performing loan ratio of the Group was 1.22%, representing a decrease of 0.01 percentage point as compared to the end of the previous year. The provision coverage ratio was 198.30%, and the risk offset was reasonable and sufficient. Firmly establish the concept of capital saving and value creation, strengthen the fine management of capital, and the capital adequacy ratio of the Group is 18.45%.

Looking forward to the whole year, the Bank will continue to do a good job in all aspects of operation and management, and strive to repay the trust and support of customers, investors and all sectors of society with steady business performance. With regard to dividend distribution, our bank has always attached great importance to the return to shareholders since the share reform and listing, and has accumulated more than trillion dividends. In recent years, the dividend ratio has been stable at a high level of 30%, providing investors with a better return on investment.

The Bank began to distribute interim and final dividends in 2024, and will continue to do so in this year. In order to effectively improve the investment value and shareholder return level of the Bank, after careful study and full demonstration, on the occasion of the 20th anniversary of listing, the Bank increased the interim dividend ratio from 30% to 31%, with a dividend amount of 0.1190 yuan per share, an increase of 8.8% over the same period last year (RMB 0.1094 yuan per share), and the strength of shareholder return was significantly improved.

Let investors fully share the achievements of our bank's operation and development. In the future, the Bank will closely focus on the "15th Five-Year Plan" group planning, comprehensively consider factors such as business performance, financial situation, shareholder returns and the Bank's future development, reasonably determine the dividend policy, maintain a stable and sustainable dividend level, and enhance investors'sense of gain. I hope you will continue to pay attention to and support the Bank of China.

As a long-term shareholder, we have always been concerned about the globalization characteristics of BOC. In recent years, globalization has also brought more opportunities for the development of BOC Group. Please tell us what progress has been made in the field of globalization since this year.

Dear investors, hello. Thank you for your attention and recognition of BOC's global business characteristics. The Bank of China has always attached great importance to the development of globalization, continued to consolidate and expand the advantages of globalization, and resolutely acted as the main channel bank for high-level opening-up. Since this year, the Bank of China has continued to deepen the synergy of the group, play an in-depth role in the "one-point access to global response" mechanism, and actively promote high-level opening-up to a new level.

First, the continuous optimization of global financial services. We will continue to take globalization as the core strategy and primary task of the Group's "15th Five-Year Plan" development plan, and continuously enhance its global layout capacity and international competitiveness. We will continue to improve the mechanism of overseas regionalization and intensive development, and optimize the management mode of overseas regional headquarters. Promote the coordination and linkage among overseas institutions and domestic and foreign institutions in key regions to go deep and solid, and unite the development forces.

Strengthen the penetration management of overseas institutions, coordinate and promote the efficient allocation of domestic and foreign resources, and comprehensively improve the quality and efficiency of headquarters enabling support. Second, "stabilize foreign trade" financial supply to improve quality and efficiency. Continue to expand the coverage of foreign trade financial services, for enterprises to handle international settlement business and foreign trade growth in the same frequency resonance, business scale ranks first in the market.

We will support the cultivation of new momentum for foreign trade, accelerate the improvement of the service system of "global response and full chain support" for cross-border e-commerce settlement, and maintain a steady growth in the scale of cross-border e-commerce settlement. High-quality services create an open window for economic exhibitions, support the "Export China" series of activities, as a major partner, successfully guarantee the holding of major national exhibitions such as the Service Trade Fair and the Investment and Trade Fair, and work together to promote global economic and trade opening and innovation cooperation.

Third, we should take various measures to open up to the outside world at a high level. Jointly set up a "Global Cooperation Alliance for Going to Sea" to help build a safe, efficient and coordinated service ecosystem. We will continue to strengthen investor services for overseas financial institutions, and the amount of bond custody for overseas institutions will remain the first in the whole market. "Interchange" market competitiveness and counterparty coverage remain in the lead. We will expand the bond repurchase business of overseas institutions and achieve full coverage of sovereign counterparties in the inter-bank market.

Global Linkage participates in the infrastructure construction of Hong Kong Gold Central Clearing System, and provides one-stop financial services covering trading, settlement, clearing, warehousing and delivery at home and abroad. Deepening global integration services, further expanding the scope of global account services, and increasing the cumulative number of effective contracted customers. Vigorously promoting the development of tax refund business, the agency tax refund area covers 27 provincial-level administrative regions, ranking the leading position in the industry, and the number of tax refund for foreigners has increased by more than 360% year on year.

We continued to facilitate the payment of overseas personnel in China, with foreign card receipt transactions increasing by 60.98% year on year, and the market share of foreign card transactions remained in the lead. The four is to take the lead in serving the international use of RMB. Be the main channel of cross-border RMB service, and further consolidate the leading edge in the field of cross-border RMB payment.

The Bank continued to expand its service network, launched RMB business in 58 countries and regions, and maintained a leading position in the number of RMB clearing banks and direct and indirect participating banks of the RMB Cross-border Payment System (CIPS). We will support breakthroughs in RMB settlement of commodities, promote the incorporation of RMB into the clearing system of the International Air Transport Association, and maintain market leadership in cross-border RMB clearing and settlement, panda bonds and offshore RMB bonds.

It took the lead in using offshore RMB treasury bond collateral to carry out central clearing business in the London Clearing House, and promoted foreign banks to incorporate offshore Chinese treasury bonds into the initial margin eligible collateral for cross-border derivatives transactions for the first time. Actively participate in the offshore RMB market, as the first batch of pilot banks in the foreign exchange trading center platform to carry out offshore RMB market-making quotation business. Deep participation in the multilateral central bank digital currency bridge, the amount of transactions, the number of transactions to maintain market leadership.

This year is the first year of the Fifteenth Five-Year Plan. We believe that in the new stage of development, the global operation of the Bank of China will face development opportunities such as the restructuring of the global industrial chain, the acceleration of Chinese-funded enterprises "going to sea", and the continuous enhancement of the international influence of the RMB. We will continue to regard globalization as the core and primary task of the Group's development strategy, and transform the global advantages of the century-old operation into the internal momentum of long-term profit growth.

Thank you for your attention.

According to the financial report, the company actively serves the "dual", "two new" and science and technology finance, and the growth rate of loans for domestic manufacturing and strategic emerging industries exceeds 16%. In the process of tilting credit resources to new productivity, how can companies balance the relationship between "supporting the real economy" and "guarding against potential risks in emerging industries"?

Dear investors, hello. Since the beginning of this year, the RMB loans of domestic institutions of the Bank of China have achieved steady and balanced growth, with the growth rate significantly higher than average level of the whole market, and new loans are mainly public loans. The Bank of China has always focused on its main business, strengthened its operational advantages, strengthened its high-quality financial services for major strategies, key areas and weak links, and better helped the real economy to break through.

Actively serving the construction of "dual", "two new" and "six networks", the balance of domestic manufacturing loans and strategic emerging industry loans increased by 16.39% and 17.32% respectively compared with the end of last year, and the balance of equipment renewal loans exceeded 210 billion yuan. Actively serving the development of private enterprises and rural revitalization, loans to private enterprises and agricultural loans increased by 11.52% and 13.20% respectively over the end of last year.

The balance of science and technology loans accounted for more than one third of public loans, and the balance of green loans (the caliber of the People's Bank of China) increased by 16.57%. On the whole, BOC continued to strengthen the active management of credit risk, took more active and effective measures, improved the level of fine management, continuously improved the quality and efficiency of collection and disposal, achieved good results in risk management and control, and maintained the basic stability of asset quality.

Bank of China's semi-annual report disclosed that by the end of June 2026, the non-performing loan rate of domestic enterprises was 1.14%, down 0.08 percentage points from the end of last year.

Next, we will continue to coordinate development and security, strengthen forward-looking research and effective response to risks, and balance support for the development of new quality productivity and related risk management and control. Thank you for your attention.

By the end of September, the company's non-performing loan rate had dropped to 1.22% (down 0.01 percentage points from the end of last year), but the provision coverage rate had also dropped slightly by 2.07 percentage points to 198.30%. Secretary Dong, in the context of increasing the write-off and disposal of non-performing assets, is the current 198.30% reserve coverage sufficient to cope with the potential risk of macroeconomic fluctuations? In the future, while maintaining the stability of asset quality, is there any plan to moderately increase the provision to enhance the ability of risk compensation?

Dear investors, hello. In the first three quarters of 2026, the Bank's asset quality remained stable, and the risk offset was reasonable and sufficient. In the next step, the Bank will strictly adhere to the bottom line of asset quality, do a good job of "controlling increment" and "reducing stock", focus on key lines, key regions, key areas and key customers, enhance the ability of forward-looking identification, active control and precise resolution, and insist on full and prudent provision. Thank you for your attention.

The company's mobile banking has nearly 107 million monthly active customers, and cross-border e-commerce transactions have increased by more than 20% year on year. As the most globalized Chinese bank, I would like to ask Secretary Dong, in the context of the current changing monetary policy expectations of the Federal Reserve, how can company further develop the advantages of overseas interest margin space and cross-border financial ecosphere to increase the overall profits of the group?

Dear investors, hello. Globalization is the inherent gene of Bank of China, and also the foundation of Bank of China's century-old operation. In recent years, Bank of China has made great efforts to improve the quality and efficiency of global operation, and global operation has increasingly shown a strong competitive advantage. The relevant progress of global operation since this year has also been introduced.

Looking ahead, we will continue to regard globalization as the core and primary task of the Group's development strategy, transform the advantages of globalization into the internal momentum of long-term profit growth, provide strong support for the Group to cope with the low interest rate environment in China, and further enhance the development resilience of Bank of China through the cycle. Thank you for your attention.

Despite the strong performance of net interest income, net non-interest income in the first three quarters increased by only 0.81% year-on-year, mainly due to fluctuations in the stock and bond exchange market. I would like to ask the management, while maintaining the resilience of intermediary businesses such as wealth management, settlement and liquidation, what specific strategic measures will the company take to increase the proportion of non-interest income and optimize the income structure in the future?

Dear investors, hello. In the first three quarters of this year, the Bank's non-interest income achieved steady growth, accounting for 31.74% of the operating income, and continued to maintain the highest level in the major industries. The Bank solidly promoted the expansion of customer account base, continuously optimized the product business layout, expanded the wealth management business, optimized the settlement and clearing business, and strengthened the global custody business. The net fee income continued the steady growth trend since last year.

At the same time, we effectively responded to the operational uncertainties brought about by the increased volatility in the financial market, and achieved steady growth in other non-interest income on the basis of the high base of the previous year. In the next stage, the Bank will continue to give full play to the advantages of globalization and integrated operation, closely focus on customer needs, effectively grasp market trends, and strive to promote the steady growth of non-interest income of the Group.

For more information, please refer to the relevant disclosures in the Bank's periodic reports. Thank you for your attention.

Although the company's fundamentals continue to improve, the current valuation of a shares and H shares is still at a relatively low historical level. As regulators incorporate market value management into the assessment of the heads of central enterprises, does the company have further market value management plans (such as the increase of major shareholders, the normalization of share repurchase, etc.) To convey confidence to the market and guide the valuation back to a reasonable range?

Dear investors, hello. The Bank of China has actively implemented the requirements of the State Council's "Several Opinions on Strengthening Supervision and Preventing Risks to Promote the High-quality Development of the Capital Market" and the China Securities Regulatory Commission's "Guidelines for the Supervision of Listed Companies No.10-Market Value Management", formulated and conscientiously implemented the market value management measures and the plan of improving valuation and quality, efficiency and return.

On the basis of improving the quality of the company, we should focus on sound operation, adhere to high-quality development, fully serve the national strategy and the people's livelihood, constantly improve operational efficiency and value creation ability, accelerate the improvement of global layout ability and international competitiveness, and effectively coordinate development and security.

Bank of China insists on creating value for shareholders and pays attention to investors' return in the long run, and has increased interim dividends since 2024; in 2025, it will provide H shareholders with the option of RMB dividend currency and service convenience for the first time, helping to promote the process of international use of RMB; in 2026, the proportion of interim dividends will increase from 30% to 31%, and the amount of dividends per share will increase by 8.8% compared with the same period last year.

In order to improve the quality and effectiveness of information disclosure, we should enhance the transparency, pertinence and effectiveness of information disclosure, and ensure that information disclosure is true, accurate, complete, timely and fair. Continuously optimize the construction of investor relations management mechanism, pay close attention to market dynamic information and market value related indicators, carefully prepare regular performance presentations, and professionally answer inquiries from investor hotlines, e-mail and "SSE e-Interactive" network platform, so as to enhance investors'understanding and recognition of the Bank's investment value.

At the same time, based on the actual situation of the Bank, the Bank will continue to follow up the progress of regulatory policies, and evaluate and implement other legal and compliant market value management methods in a timely manner. For more information, please refer to the announcement and periodic reports of the Bank's Valuation Improvement and Quality and Efficiency Improvement and Return Plan. Thank you for your attention.

According to the results, Q3's single-quarter net profit increased by 6.36% year-on-year, and the net interest margin (1.27%) in the first three quarters increased by 1 basis point compared with the end of last year, and the net interest income increased by 10.38%. Secretary Dong, in the current macro environment where LPR continues to decline, can effectiveness of the company's debt-side cost control (such as the decline in the interest rate of personal deposits) continue to effectively hedge the decline in asset-side yields?

Will there be further pressure to narrow the net interest margin in the future?

Dear investors, hello. In the current low interest rate environment, the net interest margin of domestic banking institutions is generally under pressure. The Bank gave full play to the advantages of global operation, actively seized market opportunities, focused on optimizing business structure, promoted the quality and efficiency of assets and liabilities business, and the net interest margin continued to stabilize. In the first three quarters of 2026, the group's net interest margin was 1.27%, up 1 basis point from the previous year.

Among them, domestic RMB loans maintained steady and balanced growth, the marginal interest rate of new loans stabilized, and the decline in yield slowed down significantly compared with the previous year. The maturity of long-term time deposits is superimposed on the optimization of deposit structure, which leads to a rapid decline in deposit interest rates and effectively hedges downward pressure on asset returns. The Group's net interest margin in foreign currencies increased significantly compared with the previous year, which was the key factor contributing to the stabilization of the Group's net interest margin.

The Bank will continue to strengthen active management, adhere to the coordinated development of volume and price, continuously optimize the business structure, give full play to the supporting role of global operation in the Group's response to the low interest rate environment, and strive to maintain the resilience of the trend of net interest margin. Thank you for your attention.

How to look forward to the annual performance?

Dear investors, hello. In the previous topic, we have exchanged the performance of the first three quarters and the outlook for the whole year. In the next stage, we will anchor the strategic goal of "building a strong financial institution" according to the blueprint and path determined by the Group's "15th Five-Year Plan", unswervingly promote the transformation of high-quality development, and create more abundant value and returns for investors who trust and support our development for a long time. Thank you for your attention.

Thank you for attending today's performance presentation. If you have any further questions, please contact our investor relations team. Thank you again for your concern and support for the Bank of China!

Dear investors and netizens, the Bank of China's performance presentation for the third quarter of 2026 is drawing to a close. We invite guests from listed companies to make concluding remarks.

This is the successful conclusion of the Bank of China's performance presentation for the third quarter of 2026. Thank you for the active participation of investors and netizens. If you have further questions, you can keep communicating with the company through the e interactive platform of Shanghai Stock Exchange. Thank you!