Agricultural Bank of China Ltd. Q2 FY2026 earnings call

• Financial Performance: Net profit rose 5.8%, with operating income up 11.2%. Return on net assets stood at 10.14%. Net interest margin improved to 1.28%, aided by a decline in deposit costs. Non-performing loan (NPL) ratio decreased by 2 basis points to 1.25%, marking five consecutive quarters of decline.
• Rural Revitalization Focus: Loans to county-level areas reached CNY 11.9 trillion (up 9%). Deposits in these areas contributed 40% to total deposit growth. The bank aims for county-level business to account for approximately 40% of total operations.
• Tech & Innovation Support: Loans to tech companies grew by 24%, and SME tech enterprises by 29%. Established 31 pilot funds for AIC equity investment, investing over CNY 5.7 billion in fintech projects.
• Digital Finance & AI: Aggressively integrating AI into operations, including risk control agents and customer service assistants like 'Dragon Knight'. Mobile banking users exceeded 280 million. Launched version 11.2 of personal online banking.
• Customer Base & Retail: Total personal customers reached 905 million. Individual deposits near CNY 21.3 trillion. Personal consumption loans reached CNY 1.5 trillion. Focused on elderly care finance ('Nong Yin Yanglao') and inclusive finance for MSMEs.
• Risk Management: Provision coverage ratio was 290.1%, with provisions exceeding CNY 1 trillion. Strengthened four lines of defense for risk control, emphasizing offline due diligence combined with AI tools to prevent fraud and manage inclusive retail risks.

The transcript does not provide a breakdown of financial performance by specific product segments (e.g., Retail, Corporate, Treasury) in terms of absolute revenue contribution percentages. The report presents aggregate financial metrics: Net profit grew by 5.8% year-on-year; Operating income increased by 11.2%; Net interest margin expanded by 2 basis points to 1.28%; and Total loans increased by 6.2% to CNY 3 trillion in financing provided.

• Dividend Policy: The interim dividend payout ratio is raised by 1 percentage point to 31%.
• H2 Profitability: Management expressed confidence in maintaining stable development momentum, driven by declining liability costs, asset operation advantages, and continuous risk control improvements.
• Strategic Direction: Commitment to the 15th Five-Year Plan, focusing on rural revitalization, tech innovation, and digital transformation. No specific quantitative H2 revenue or profit guidance figures were provided, but qualitative outlook remains positive based on current trends.

• Asset Quality in Inclusive Finance: Specific attention paid to controlling non-performing loans in inclusive retail and small/micro enterprise sectors. Risks from illegal intermediaries and fragmented retail lending are actively managed through strict due diligence and AI verification.
• Real Estate & Local Government Debt: Monitoring risks in real estate presale funds and local government financing platforms. Adhering to market-oriented transformation without adding new hidden debt.
• Interest Rate & Market Volatility: Exposure to fluctuations in bond yields and global monetary policies (Fed/EU rate changes). Managing duration risk and optimizing security portfolio allocation.
• AI Implementation Risks: Acknowledged risks associated with AI 'black box' effects, hallucinations, and data security. Mitigation involves categorized scenario management and robust internal controls.

Q: Analyst asked about H2 growth expectations and driving forces given strong H1 performance. / A: Management cited four drivers: leveraging rural network advantages for asset income, continued orderly decline in liability costs as time deposits reprice, expanding diversified financial services for economic structural optimization, and maintaining industry-leading risk control standards. They expect stable growth supported by resilient macroeconomic dynamics.

Q: Journalist inquired about asset quality outlook, specifically for inclusive retail, noting NPL declines. / A: Confirmed NPL ratio dropped to 1.25% (transcript later mentions 1.65% in one section, likely typo, but trend is down). Emphasized strict categorization and high provision coverage (>CNY 1 trillion). For inclusive retail, they will optimize credit structure, implement long-term risk monitoring mechanisms, integrate online/offline due diligence to prevent fraud, and strengthen frontline staff training and accountability.

Q: Analyst asked about liability strategy amidst deposit repricing and shifting capital utilization. / A: Highlighted three features: stable deposit growth (CNY 39.59T avg daily balance), consolidation of core advantages (personal deposits >64% of total), and coordinated quantity/price development. Noted that concentrated repricing of high-interest time deposits will further reduce liability costs in H2. Strategy includes serving rural revitalization, diversifying funding sources, and differentiated deposit management.

Q: Analyst asked about future plans for county-level/rural business development. / A: ABC will maintain rural service as its core mission, aiming for ~40% contribution from county-level business. Plans include targeted credit policies for agriculture, supply chain integration, technology introduction to key counties, and expanding physical networks (adding 2,000 town/country outlets). Will use AI to empower rural services while strictly controlling compliance and operational risks.

Q: Analyst asked about retail business key focuses given 900M+ customers. / A: Retail is the strategic foundation. Key priorities: 1) Solidify base for 900M customers, especially elderly care finance ('Nong Yin Yanglao') and pension accounts; 2) Boost consumer finance via high-frequency scenarios and policy-supported consumption loans; 3) Safeguard CNY 25.7T AUM with high-quality wealth management products; 4) Leverage 30,000 branches for integrated online-offline services. Emphasized consumer protection and precise data-driven service.