China Construction Bank Corp. Q2 FY2026 earnings call

• Financial Performance: Strong growth in profitability with Net Interest Margin (NIM) improving to 1.37% (+3 bps YoY) due to liability cost optimization and asset yield stability. Cost-to-income ratio improved to 22.17% (-1.55 ppts YoY).
• Strategic Priorities ('Five Chapters'): Focus on Technology Finance (double-digit loan growth, leading industry position), Green Finance ($6.53 trillion balance, +8.95%), Inclusive Finance (3.82 million micro/small enterprise customers), Pension Finance (Pillar 2 AUM up 10.7% to $800 billion), and Digital Finance (AI deployed in 600+ scenarios).
• Asset Quality: Robust risk management with Non-Performing Loan (NPL) ratio at 1.29% (-0.02 ppts) and Provision Coverage Ratio at 238.9% (+5.54 ppts). MPL ratio at 1.29%.
• Capital & Dividends: Capital Adequacy Ratio stands at 19.42%. Interim dividend payout ratio increased to 31%, with total interim dividends of $52.582 billion ($2.01 RMB per 10 shares).
• Digital Transformation: AI integration across marketing, risk control, and operations. 'Bond' smart assistant for customer managers generated $57% increase in new AUM. AI coding contribution rate increased by 50%.

CCB does not report financial performance by distinct product segments (e.g., Retail vs. Corporate) with specific revenue contribution percentages in this transcript. The bank reports consolidated figures: Operating income was $426 billion (up 10.48% YoY), Profit before provision was $328 billion (up 13% YoY), and Net profit was $171 billion (up 5.56% YoY). Net interest income stood at $115 billion (up 16.31%), while non-interest income contributed to the remaining operating revenue. Key asset classes include gross loans of $29.34 trillion and financial investments of $13.99 trillion.

• Net Interest Margin (NIM): Management expressed confidence in optimizing NIM further in H2 through balanced volume, price, and structure management, aiming to maintain industry-leading levels.
• Loan Growth: Commitment to steady loan disbursement aligned with national strategic priorities (technology, green, manufacturing), targeting double-digit growth in tech finance loans.
• Cost Control: Continuation of disciplined expense management to maintain low cost-to-income ratios.
• Risk Management: Maintenance of stable asset quality with prudent risk controls; no specific quantitative guidance provided for NPL ratios beyond current trends.
• Dividend Policy: Sustained commitment to shareholder returns with a payout ratio above 30%.

• Economic Pressure: Acknowledgment of operational pressures and challenges in the Chinese economy, particularly in consumer markets and regional banking.
• Interest Rate Environment: Low interest rate environment impacting net interest margins and requiring active liability cost management.
• Credit Risk: Potential risks in key areas including personal finance, consumption sectors, and real estate; managed through proactive risk identification and AI-driven monitoring.
• Regulatory Compliance: Need to adhere to strict regulatory requirements, especially regarding AI development, data security, and consumer protection.
• Market Volatility: Risks associated with bond market fluctuations and credit spreads, mitigated through dynamic portfolio management.

Q: What are the primary drivers behind the robust momentum in operational revenue and non-interest income, and how sustainable is this trend?

A: President Zhang attributed the 10.48% growth in operating revenue to diversified revenue sources, specifically strong net interest income (+16.31%) driven by optimized asset-liability allocation and higher yields, alongside non-interest income growth (+16.31%) fueled by wealth management, custody, and settlement services. He emphasized that core indicators like ROE, ROA, and capital adequacy remain balanced, supported by a 1.55 percentage point drop in the cost-to-income ratio due to prioritized technology investment and efficient expense management. The sustainability is underpinned by flexible adaptation to market trends and deep integration of financial services across corporate and retail sectors.

Q: How does CCB plan to manage its Net Interest Margin (NIM) given the low-rate environment, and what specific measures were taken in H1?

A: President Zhang explained that NIM improved to 1.37% (+3 bps YoY) through comprehensive management of volume, price, and structure. On the asset side, they optimized credit and loan maturity structures, with long/mid-term loans comprising 71% of domestic loans, and focused on high-yield assets like tech and manufacturing loans. On the liability side, they controlled costs by leveraging major capital pools, reducing time deposit interest payouts by 34 basis points, and actively managing high-cost liabilities from other financial institutions. For H2, they will continue to balance asset pricing with market competition and optimize liability duration to stabilize NIM.

Q: Can you detail CCB's strategy and progress in Artificial Intelligence implementation, particularly regarding risk management and customer service efficiency?

A: Deputy President Lei described AI as a strategic option for high-quality development, with over 600 AI-powered applications launched. In customer service, the 'Bond' smart assistant helped customer managers increase new AUM by 57% and reduced report generation time from days to hours. In risk management, AI agents are used for customer risk identification and analysis, enhancing early warning capabilities. In R&D, AI coding contributions increased by 50%, with a near 70% adoption rate for AI-generated code. Management stressed that AI development is strictly governed by compliance and security frameworks to ensure controllable and safe deployment.

Q: How is CBB addressing the shift in financing structures towards direct financing, and what role do bond investments play in this context?

A: Mr. Ji noted that the shift to direct financing reflects economic transformation, prompting CCB to integrate investment banking and commercial banking services. Bond investments grew significantly, with over one trillion added in government bonds and increased allocation to credit bonds in advanced manufacturing and green sectors. To mitigate rate risks in a low-yield environment, CCB implemented long-term allocations, utilized secondary market opportunities during volatility, and adjusted strategies based on yield curve dynamics. Going forward, they will act as market makers, provide liquidity, and offer cross-border investment platforms to support both domestic and international clients.

Q: What are the key factors supporting CCB's capital adequacy and the rationale behind increasing the dividend payout ratio to 31%?

A: Mr. Ji stated that the Capital Adequacy Ratio remains high at 19.42% due to organic growth from net profits ($171 billion) and lean capital management focusing on economic value-added businesses. CCB also issued $150 billion in various capital bonds in H1 to strengthen its TLAC indicator. The decision to raise the interim dividend payout ratio to 31% was made to better return value to shareholders, balancing investor returns with the bank's long-term development needs. This reflects a consistent policy of prioritizing shareholder returns since IPO, with total dividends exceeding 1.4 trillion RMB over the past three years.