Transcript of CITIC BANK's performance meeting: After "focusing on revenue growth," retail asset quality has shown early signs of improvement

Faced with the operating conditions in the first three quarters of this year, the performance of joint-stock banks will reveal much "warmth."

On November 11, CITIC BANK held a performance briefing for the third quarter of 2025. The company's executive director and vice president Hu Gang, board secretary and general manager of the risk management department Zhang Qing, independent director representatives, and heads of departments and subsidiaries of CITIC BANK attended the meeting.

At this performance meeting, CITIC BANK's senior executives provided detailed answers regarding the company's next development strategy, trends in the bank's net interest margin, asset quality trends, net fee income, and other topics. Overall, while the statements were neutral, there was still a hint of warmth.

Striving to Achieve Good Operating Performance for the Year

Board secretary and general manager of the risk management department Zhang Qing introduced that in the first three quarters of 2025, facing a complex and changing external environment, CITIC BANK maintained strategic stability, actively responded to risk challenges, and fully seized market opportunities. Major indicators remained stable, and the overall operating performance continued to show an upward and positive trend.

In terms of operating efficiency, net profit continued to grow, and fee income showed good momentum. In the first three quarters, CITIC BANK achieved a net profit attributable to shareholders of 53.391 billion yuan, a year-on-year increase of 3.02%, with the growth rate improving by 0.24 percentage points compared to the first half of the year; it achieved net operating income of 156.598 billion yuan, a year-on-year decrease of 3.46%, in line with market trends; the net interest margin gradually stabilized, remaining flat compared to the first half of the year, and increased by 2 basis points in the third quarter compared to the second quarter; non-interest net income was 48.896 billion yuan, a year-on-year decrease of 6.40%, of which net fee and commission income was 25.688 billion yuan, a year-on-year increase of 5.75%.

In terms of asset quality, the non-performing loan ratio remained stable, and the risk compensation ability was strong. The non-performing loan ratio was 1.16%, unchanged from the end of the previous year; the provision coverage ratio was 204.16%, maintaining a reasonable level.

In terms of business expansion, the scale grew steadily, and the structure continued to optimize. Total assets reached 99 trillion yuan, an increase of 3.83% compared to the end of the previous year; general loans accounted for 56.28% of total assets, an increase of 0.99 percentage points compared to the end of the previous year. Total liabilities reached 90.6 trillion yuan, an increase of 3.79% compared to the end of the previous year; self-operated deposits accounted for 67.00% of total liabilities, an increase of 0.78 percentage points compared to the end of the previous year.

Zhang Qing emphasized that in the fourth quarter, CITIC BANK will closely follow changes in the situation, focus on the main line of high-quality development, strengthen the "big push for revenue" orientation, continue to reduce costs and increase efficiency, and further forge stable, balanced, and sustainable market competitiveness, striving to achieve good operating performance for the year and laying a solid foundation for a good start next year.

Net Interest Margin Stabilizes After Two Consecutive Quarters of Decline

Executive director and vice president Hu Gang stated that CITIC BANK actively optimized its asset-liability structure, achieving a stabilization of the net interest margin after two consecutive quarters of decline. On the asset side, it increased the issuance of general loans, continued to reduce the scale of low-yield assets, and worked to stabilize overall asset returns through structural adjustments. On the liability side, it continued to strictly control various high-cost deposits, promoted the stabilization of demand deposits, further reduced the cost of liabilities at a low level, and continued to maintain a competitive advantage in the market Compared to the same period for joint-stock banks, CITIC BANK's net interest margin in the third quarter showed marginal changes close to the average level. The marginal decline in asset yield was in line with the industry average, meeting management expectations. The changes in general loan yield followed the industry average, while continuing to reduce the scale of bill discounting to improve asset structure. The cost of liabilities was further reduced at a low level, maintaining a competitive advantage in the market. The marginal decline in deposit cost rate in the third quarter was better than the industry average, as the bank continued to strictly control various high-cost deposits, resulting in a decrease in scale.

Looking ahead to the trend of net interest margin, the improvement in the policy environment, the gradual introduction of "anti-involution" policies to regulate orderly competition in the banking industry, the central bank's promotion of interest rate cuts for deposit and loan symmetry, and the further improvement in the efficiency of monetary policy transmission are all favorable for stabilizing the bank's net interest margin. CITIC BANK will continue to optimize its asset-liability structure and accelerate the construction of settlement capabilities according to the "structure is king" approach, adhering to the theme of "stable net interest margin" and maintaining a competitive advantage in the industry.

Confident in Maintaining Comparative Advantage in Net Fee Income

Regarding retail intermediary business income, the heads of departments and subsidiaries at the headquarters introduced that in the first three quarters of 2025, CITIC BANK firmly implemented the "Five Leading" banking strategy, seized market opportunities, strengthened capability system construction, and continuously expanded diversified income sources, achieving net fee income of 25.69 billion yuan, a year-on-year increase of 5.75%, with the growth advantage further expanding compared to the first half of the year.

By product:

Wealth Management Business: In response to the demand for wealth preservation and appreciation among residents in the current interest rate reduction environment, the bank has continuously strengthened sales channel construction and improved product quality management, resulting in significant growth in quarterly income and scale while enhancing customer investment experience.

Agency Sales Business: Seizing market opportunities boosted by the capital market, the bank actively adjusted its business strategy and enhanced customer service capabilities, gaining recognition from clients, leading to rapid income growth.

Comprehensive Financing Business: Focused on serving the real economy, the bank relies on CITIC Group to create a unique "Commercial Bank + Investment Bank + Collaboration + Matching" ecosystem, leading the industry in corporate debt financing tool underwriting scale, with income from bond underwriting, bank acceptance, guarantees, and letters of credit maintaining an industry advantage.

In the fourth quarter of 2025, the favorable trend in the capital market, combined with national policies to expand domestic demand, promote consumption, and counteract involution, will provide strong support for the expansion of fee income. CITIC BANK has been continuously building a leading wealth management bank and comprehensive financing bank in recent years, and it is expected to reflect its value in this round of recovery, confident in maintaining a comparative advantage in net fee income among peers, enhancing the stability of ROE, and improving investor returns.

Corporate Loan Growth Better Than Expected

In terms of credit issuance, the heads of departments and subsidiaries at the headquarters introduced that general credit issuance is not only an important means to implement national policy guidance and improve the quality and efficiency of services to the real economy but also an important direction for optimizing major asset allocation. Since the beginning of the year, CITIC BANK has promoted reasonable growth in credit scale and continuous optimization of structure under the overall framework of the "increase high and decrease low" major asset allocation approach In the first three quarters of this year, CITIC Bank's general loans maintained stable growth. From a structural perspective, corporate loans grew better than expected, achieving a year-on-year increase; in the context of an overall weak market, CITIC Bank's personal loan increment ranked among the top in comparable peers; credit card loans experienced a sector-wide decline, but CITIC Bank's existing scale and yield remained advantageous compared to peers.

From an industry structure perspective, new loans were mainly directed towards manufacturing, leasing and business services, and wholesale and retail industries, further enhancing the quality and efficiency of credit services to the real economy; real estate loans grew moderately, supporting the stable and healthy development of the real estate industry. Resources continued to tilt towards major national strategies, key areas, and weak links, with key sectors such as medium- and long-term manufacturing, green, strategic emerging, and agricultural-related fields maintaining rapid growth. From the perspective of retail growth structure, mortgage loans further played a stabilizing role.

In the future, we will continue to adhere to the operational strategy of "quality growth," promote moderate growth in credit scale, continuously optimize the business structure, and focus on stabilizing asset yield and interest margin levels while implementing national policy guidance.

Retail asset quality has shown early signs of improvement

Regarding asset quality, Zhang Qing, Secretary of the Board and General Manager of the Risk Management Department, stated that in the face of a complex external environment, CITIC Bank has maintained a firm risk baseline, with overall asset quality remaining stable and risk compensation capabilities at an acceptable level. The credit cost has decreased year-on-year, and the quality of development has further improved.

As of the end of September, CITIC Bank's non-performing loan ratio was 1.16%, unchanged from the beginning of the year and the end of the first half; the ratio of non-performing and attention loans was 2.79%, down 0.02 percentage points from the end of the first half and down 0.01 percentage points from the beginning of the year; the provision coverage ratio was 204.16%, remaining within an acceptable range; the credit cost ratio was 0.90%, a year-on-year decrease of 0.21 percentage points.

The quality of corporate assets continues to improve. By the end of September, CITIC Bank's non-performing balance of corporate loans was 36.295 billion yuan, a decrease of 610 million yuan from the beginning of the year, with a non-performing rate of 1.13%, down 0.14 percentage points from the beginning of the year, continuing the trend of dual declines in non-performing loans since 2021.

Retail asset quality is under industry pressure, but early signs of improvement have emerged. By the end of September, CITIC Bank's retail loan non-performing rate was 1.30%, a slight increase of 0.01 percentage points from the end of June, with the rate of increase significantly slowing compared to the first half of the year. The asset quality of mortgage loans has stabilized, and the early overdue rate of consumer loans has decreased year-on-year.

Since last year, CITIC Bank has focused on "three key areas" to enhance retail risk control capabilities. First, adapting to the macro situation, optimizing the retail risk control mechanism. Risk supervisors for personal loans have been equipped at the branch level, strengthening business + risk joint prevention and control. Second, optimizing the credit structure to solidify the foundation of asset quality. Increasing the issuance of lower-risk products, the proportion of mortgage loans has continuously increased, stabilizing asset quality and providing strong support for retail risk convergence; increasing the issuance to high-scoring customers to further optimize the customer structure. Third, enhancing management capabilities and strengthening refined management of the entire credit process. Differentiated strategies are implemented for different products, regions, and customer groups, accelerating the iteration and optimization of model strategies, preventing fraud risks, and enhancing early warning and monitoring capabilities In the next phase, CITIC BANK will continue to focus on key areas, optimize major asset allocation, control both new and old assets, implement a three-line defense strategy, and solidify the basic asset quality. We are confident that the asset quality will remain stable by the end of the year.

Increase Investment in Technology

Zhang Qing, Secretary of the Board and General Manager of the Risk Management Department, introduced that CITIC BANK's investment in technology has increased. On one hand, there is a greater investment in computing power and infrastructure related to large models and artificial intelligence; on the other hand, resources are being concentrated around key projects such as the Galaxy Project, Tianyuan Treasury Project, and Centralized Operation Platform 2.0.

This year, the digital productivity has been accelerated, with several key annual projects such as the international business cross-border communication, Xiaotianyuan platform, Corporate Mobile Banking 4.0, financial market sales flow table construction project, and full-stack cloud upgrades for subsidiaries being put into production. The enterprise-level data capabilities have continued to improve, earning the DCMM data management capability maturity "Optimization Level" certification, becoming the first joint-stock commercial bank to obtain the highest level of certification. AI innovative applications have accelerated breakthroughs, with several high-value scenarios such as Centralized Operation 2.0, next-generation intelligent customer service, corporate MPP assistant, and intelligent outbound calling large models achieving partial functional scaling applications.

Actively Promote Valuation Enhancement Plan

Heads of departments and subsidiaries at the headquarters introduced that CITIC BANK will continue to carry out mid-term dividends this year, giving back to the trust and support of investors with practical actions. The mid-term dividend payout amount this year is 10.46 billion yuan, accounting for 30.70% of the net profit attributable to ordinary shareholders of CITIC BANK after consolidation for the mid-term of 2025, an increase of 1.5 percentage points compared to last year's mid-term dividend ratio, with a cash dividend of 1.88 yuan per 10 shares (including tax).

In the future, CITIC BANK will continue to actively implement the announced "Valuation Enhancement Plan," continuously striving to enhance its investment value and shareholder return capability.

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