Bank of China Ltd. Q2 FY2026 earnings call

• Financial Performance & Stability: Achieved steady growth with operating revenue up 8.41% and net profit up 4.67%. Net Interest Margin (NIM) stabilized at 1.27%, supported by improved foreign currency NIM and controlled liability costs. Asset quality remains robust with an NPL ratio of 1.22% and provision coverage of 285%.
• Globalization Strategy: Consolidated global footprint with presence in 64 countries/regions. Overseas institutions contributed over 27% of net profit. Key achievements include leading cross-border RMB settlement globally, establishing clearing bank status in new regions (UK, Sri Lanka, Indonesia), and growing overseas custody assets by 16-19%.
• Service to Real Economy & Tech Finance: Tech loans account for >1/3 of corporate loans, serving 200,000 tech companies including 5,200 AI firms. Green finance balance grew 13.32%. Inclusive finance for MSMEs grew 10.6% in amount.
• Digital Transformation & AI: Launched 'AI Plus' plan with over 32,000 customers across 3,800 scenarios using BOC’s large language models. Mobile banking MAU increased 6.6%. Paperless processes expanded to 70%.
• Capital & Dividends: CAR ratio stands at 18.31%. To mark the 20th anniversary of IPO, dividend payout ratio suggested to increase from 30% to 31%, with a cash dividend of CNY 1.19 per 10 shares.
• Strategic Planning: Board adopted the 15th Five-Year Plan focusing on six capacity-building areas: serving the real economy, global footprint, customer service, risk management, operational integration, and talent pool.

The transcript does not provide a granular breakdown of financial performance by specific product segments (e.g., Retail, Corporate, Investment Banking) with absolute revenue figures and percentage contributions. The management reports consolidated group-level metrics: Operating revenue was RMB 357.1 billion; Net profit attributable to shareholders grew by 4.67% (RMB) and 5.10% (local currency). Overseas net profit contribution remained above 27% of total group net profit. Non-interest income was RMB 120.38 billion, accounting for 33.71% of total income.

• Asset & Liability Management: Commitment to keep domestic RMB loan growth higher than industry average, focusing on tech, green, and inclusive finance. Overseas loan extension to maintain double-digit growth in RMB-denominated loans.
• NIM Outlook: Expect continued stabilization through active asset-liability management. Supportive factors include declining deposit costs, optimization of high-yield assets, and strong foreign currency NIM contribution. Acknowledge pressure from stabilizing RMB loan yields but anticipate resilience via structural adjustments.
• Non-Interest Income: Project steady improvement driven by settlement/clearing, wealth management agency sales, and global custody services. Emphasis on leveraging global network to enhance fee income amid low interest rate environments.
• Dividend Policy: Suggests increasing the dividend payout ratio to 31% for the current year, maintaining a commitment to stable shareholder returns.

• Asset Quality Pressures: Domestic personal banking requires strict overdue and NPL management. Corporate sector risks need proactive forecasting and orderly resolution. Overseas business faces risks from potential over-concentration of loan expansion in specific sectors.
• Market & Interest Rate Risks: Uncertainty in US dollar interest rates impacts overseas investment returns. Need to manage interest rate and exchange rate risks actively, especially given the significant portion of foreign currency assets.
• Operational & Compliance Risks: Complexity of global operations necessitates strengthened look-through risk management and compliance systems across all jurisdictions. Ensuring data security and compliant AI application is critical as digital transformation accelerates.

Q: How will BOC balance domestic and overseas loan extension while maintaining quality under the 15th Five-Year Plan? / A: President Zhang stated that BOC will prioritize serving the real economy with domestic RMB loan growth exceeding industry averages, focusing on tech, green, and manufacturing sectors aligned with national plans. For overseas business, they aim for double-digit growth in RMB-denominated loans, targeting smart manufacturing and renewable energy. The strategy involves balancing volume and price, optimizing asset-liability structures, and leveraging global networks to support Chinese companies going global while ensuring asset quality stability through rigorous risk management.

Q: What are the drivers behind the stabilization of NIM and how will it evolve in H2 2026? / A: EVP Huang explained that NIM stabilized at 1.27% due to better foreign currency NIM performance and controlled RMB liability costs. Short-term pressures from low RMB loan yields are offset by declining deposit costs and repricing of mature deposits. Long-term support comes from expanding high-yield assets, enhancing risk-based pricing, and continuing reliance on higher foreign currency spreads. Despite USD rate uncertainty, BOC expects NIM resilience through active asset-liability adjustments and a diversified currency allocation strategy.

Q: What are the key strategies for sustaining non-interest income growth? / A: EVP Huang highlighted four drivers: growth in settlement/clearing fees due to increased corporate accounts and cross-border transactions; expansion in wealth management via agency sales of funds and insurance; growth in custody services leveraging BOC’s global reach; and enhanced financial market trading revenues. Future prospects rely on consolidating these pillars, particularly benefiting from low-interest-rate-driven wealth management demand and synergies between domestic and international operations to boost fee income.

Q: How does BOC plan to turn its globalization advantage into profitability during the 15th Five-Year Plan? / A: President Zhang outlined three pathways: first, optimizing global asset-liability allocation to exploit interest rate spreads between RMB and foreign currencies; second, leveraging the extensive global network (covering G20, BRICS, ASEAN) to expand non-interest businesses like custodian services and financial markets trading; third, driving synergies between domestic branches and overseas entities to serve clients comprehensively. The goal is to make overseas net profit contribution break new records while maintaining high ROE and cost efficiency abroad.

Q: What are BOC's specific breakthroughs and future plans for Tech Finance? / A: President Zhang detailed that tech finance accounts for one-third of corporate loans. Future plans include shifting from standalone solutions to industry-wide coverage ('one chain, one strategy'), starting with AI industrial chains. They will offer full-life-cycle products from early-stage innovation loans to global expansion financing. Additionally, BOC is building a collaborative ecosystem involving bonds, equity, and insurance, partnering with government funds and legal/accounting firms to provide comprehensive support to tech companies, aiming to be a leader in supporting national strategic technologies.