Agricultural Bank of China Ltd

SSE:601288

Earnings Call Transcript 2023-Q2

[Han Guoqiang, Secretary of the Board of Directors]

Ladies and gentlemen, good afternoon. I'm the Secretary of the Board of Directors of ABC. I'm very glad to invite the investors, analysts as well as press brands to participate in the Agriculture Bank of China 2023 Interim results announcement. I'd like to express my heart for participation and express my appreciation for your long-term support.

First of all, I'd like to give you an introduction about the leaders of the Agricultural Bank of China to order this event with their presence. They're the Vice Chairman, Executive Director, President, Mr. Fu Wanjun; Executive Director, Vice President, Mr. Zhang Xuguang; Executive Director, Vice President, Mr. Mr. Lin Li; Vice President, Mr. Liu Xiaopeng; Vice President, Mr. LIU Hong.

At the same time, I would like to introduce all of the Direct executives who participate in this event online. We have a lot of friends coming to this announcement, and we also have a lot of friends coming from all around the world who join us online. Therefore, in the exchange and discussion, we will have the onsite Q&A session and internet Q&A to make sure the investors, analysts, past friends, as well as stakeholders can have a really comprehensive communication with the management team. And we will have a result announcement and Q&A session.

First part, I would like to welcome Mr. Fu Wanjun to give us an introduction about the interim results of the Agriculture Bank of China. Welcome.

[Fu Wanjun, Vice Chairman, Executive Director, President]

Distinguished investors, analysts, and their brands from press, good afternoon. Welcome to the Agriculture Bank of China 2023 interim results announcement. Now, I'd like to on behalf of the management team to give you brief introduction about the performance of the first half. The first half we fully implemented the CPC, and we follow the deployment of the CPC Central Committee, and to fulfill our duty of supporting agriculture industry and receive the really good results and financial results.

And our value creation capability is stable in the first half. So net profit is about RMB133 billion with a gross rate of 3.9%. Revenue is RMB365 billion 5.8%. Service charge commission are RMB50.7 billion increased by 2.5%. ROE is about 274% [ph] ROE 11.43%. And the second one, we have a really balanced development of the assets and debt. Overall assets is about RMB38 trillion increased by RMB4.1 trillion. Debt amount RMB21.8 trillion. For the debt, it's about RMB35.3 trillion by RMB4.1 trillion.

And the four-caliber deposit amount RMB33 trillion by [indiscernible] RMB3.8 trillion. And the asset quality is really good, and the NPL ratio decreased into 1.35%. And also, we can see that it's a special the probation coverage also improved very well. Special mentioned loans and reduced by two BP and so overdue don reduced by nine BP and we have actually good asset level. And among the backers 2023 ranking, we're ranking number three and the capital adequacy rate are ranking the top, and it's about 16.25%.

And while serving the agriculture industry, it's our duty and also our core business in the first half. Agriculture back of China followed the beginners mind and have deep concentration of agriculture market to push the revitalization of rural areas to help, to improve the efficiency of development and to accelerate the development of agriculture and strong agriculture country. And to provide the support, financial support to the -- for the development of agriculture industry. We continuously increase the quite excitement of agriculture, rural areas farmers. And we can see that now we have inquest by RMB1.02 trillion in terms of county level loans and – loans is over RMB1 trillion to RMB1.04 trillion increase by RMB261.3 billion. For the agriculture related zones, we actually increase by 5.9% by RMB898 trillion them. And now we increased the newly about formatting users and the customers.

And also, we cover the plantation and the seed industry to safeguard food security. For food field loans, its amount is about RMB272 billion increase by 53% for seed industry, lower amount is about RMB47 billion increase by 67%. We also serve the real economy. This is our duty to perform. In the first half, agriculture back of China follows requirements of macro regulation such as real economy, put it as a starting point, and also, to follow this development strategy, to strive to serve the high-quality development of the real economy and to follow the strong manufactured policy to empower the industrial upgrade and transformation both overall amounts, it's about RMB612 billion. We further improve the capability of serving the finance industry and for the emerging industry, so long increase the over 40%. And for inclusive finance, we try to empower the SMEs. And now the -- is about RMB3.3 trillion increase by 29.5%.

We serve the green finance and serve the whole country. Now the green loans residue is about RMB3.6 trillion increase by 34.4% and the increase amount and the ratio are creating a record height. And also, we serve the financing, fundraising demand of the real estate developers. And we have about 200 projects restored and 100 projects delivered in this field. And we also serve the private economy to find a good way to serve the private companies.

Now the resident in private loans is about RMB3.5 trillion increased by RMB471 million increased by 15.5%. And we also serve the diversified amount of the real economy and for the financial investments by the RMB500billion and the first and our international business increased about RMB900billion by 25% worldwide. And for the innovation, these are actually the momentum of the develop of the back. And the first half we stick to the expansion of customer base to develop the classification of the customers to push forward the scientific empowerment, to push the high-quality development of the business, and work with a high-level innovation to push the transformation to further expand and consolidate the customer base to provide the foundation for the banks to further enhance our skills and to build a safeguard.

And the personal customer's amounts is about RMB800 million back in the first amount of competitors. And it's a rating RMB19 trillion in by RMB6 trillion. The personal loans actually in by RMB400 billion, and the amount is ranking the first and with personal consumption loan, it's about RMB900 billion increased also among the highest. And for corporate customers over [Indiscernible] to [Indiscernible] and also writing the first. And we can see that the personal individual customer amount is about RMB19.6 trillion by RMB1.23 trillion. And for the Palm Mobile banking, the user amount is about 1,900 million. And we can see that in terms of the custody business.

It's scale's about RMB40.8 trillion increased by 6%. And for the family, the scale is about RMB80 billion increased by RMB32 billion, and it's increasing amount is ranking the first. And we have also signing a lot of new customers, and the newly signed company customers are over 1000 in the first half. When we face a complicated situation internally and externally, we have good risk control to further control the risk as a digital risk to further improve our forward think capability against the marketers and to follow a stringent compliance strategy.

Also, to push the credit structure optimization adjustment to focus on the risk of monitoring the key, key areas we further improve the risk and control capability and further building of the platform and also, the foreign next change risk got controlled within a certain range and we completed the multisystem and multi-region disaster recovery rehearsal. And the next step, the agriculture back of China will follow the Chinese socialism characteristic spirits lead by preserving to follow the strategy of agriculture, rural areas, and farmers, and to further improve our capability of financial service to make our contribution to the modernization development of China and the agriculture industry. Thank you.

President Fu talked about the business balance as well as serving the strong agriculture strategy to lift us to a higher level, to serve the real industry, to further improve the momentum of development, to keep a stable development of assets and balanced development in these five aspects. He concluded the performance of the first half of agriculture back, back of China and also looking to further work in the next half. And thank you for sharing.

[Operator]

[Operator Instructions]. Now it's time for Q&A. So, we'd like to start from the lady in the first role.

[Unidentified Analyst]

[indiscernible], comes from the current economic situation without a lack the demand and consumption. And this is about the stagnation of efficient credit demand. So, could you give us an introduction about the situation of placement and how you look into the future trend?

And now when we lack the internal demand, what's the next step? What will be the optimization for the placement in the future? Thank you.

[Unidentified Company Representative]

Okay. Now let's welcome the west to answer the question. Thank you for your question. I'm about to answer this question. For the first aspect, the first question you mentioned is about the first half credit placement situation. I think I can first answer this question. This year, the agriculture back of China followed the strategy of stable growth and expanded internal demand, to serve the agricultural areas, the farmers, and serve the real economy, and the first half of the overall credit placement show.

The three features I would like to share with you in terms of the reasonable growth of and continuously restructuring optimization and focus on the key links, the key areas, and we have reasonable growth of the demand. And the balance is about by the end of June, it's about 630, and with growth of about 10%. We also continuously improved the structure and the corporate capital was stable in the first half placement of individual loans and this complicated period also showed good growth.

We increased newly by 400 and for in mortgage loans in the first half, it's about also for biding 14 many. And individual loans increase by RMB 900 million and the personal consumption and the mortgage loans increase actually are racking the first for the major regional strategy. Along with this strategy, actually, these major cities and the province is of higher than the average.

The country level of [Indiscernible] is more than RMB500 million rate of 13%. For manufacturers, the balance is about 20 BP, and with a gross rate of 21.6%. For the strategic industry, it's about RMB1.8 trillion -- rate of 40%. For energy industry, it's about RMB6 trillion with a growth rate for 34.3%. This is about the performance of our loans and credit placement in the first half. We kept really reasonable growth of the overall amount and also have a balanced structure and focus on the key areas in the industries. This is the first question.

And for the second question, we appear about the current situation, about the economic recovery and the lack of the demand, and I think that for this question, we need to think about it in the double aspects. First of all, we need to discuss ruling about the China's economic features. We have a strong resilience and the potential of domestic economic development in the long run is really promising and this will not change.

And at the same time, we need to also fully notice that recovery of the economy is actually a spiral process, a spiral upward process. Now we lack efficient demand, but this issue, I believe that as a recovery of the economy, it will be largely improved in the future. And besides, we look at the operation practice and our, as well as the demonstration of the demand and in different industries, different situations. For example, in real asset industry as well as the relevant industries, there are also some demand of part of the export industries that are impacted.

But at the same time where the agricultural areas, farmers, new energy, mobile industry, the high-tech industry, and Green Finance for green low carbon industries. And these industries, their credit demand actually are really strong. So, we need to timely detect and find these kinds of demands and supply their demand. And that's the second one. And the third point, I like to see that when you answer, when you tried ask this question, and a while ago maybe you paid attention to this, speaking into that. So, we look at RMB allows that the performance, actually it's below the market expectation.

And mainly in July -- in June, we had the adjustment of the monetary policy and it impacted the institution. Also, we have some elements which cause conception and further credit placement. This is a periodical and it's actually a continuous process. And I believe that the recovery trend will not change as four policies to release the stabilize economy. I believe we'll have a fast-economic recovery and the credit demand will be further restored and improved.

And when we look at the Agriculture Bank of China, when we face this year, the stagnation or lack of credit demand, we actually prepared and deployed in advance. And in the first half of the project marketing, especially the middle and long-term project reserve but we actually put it as the priority of us, and further accomplish and store more projects and to further the sustainable development of the technical difficulty project reserve we already approved.

But the amount actually increased by 7K 8 betting worldwide. And we're confident we'll have a stable growth placement for the second half of this year. And for the next step in agriculture back of China for credit placement. What is the focus of our placement? I think that for this question, agriculture back of China will always focus on the compatibility of the credit structure to precisely meet the demand of the public to, regardless of the orientation and the targets of our credit placement, we'll follow the change of the economic situation on the national strategy as well as the direction of economic transformation to constantly optimize our policy and direction and first, we need to further enlarge the credit loans.

And in January, we --national leaders mentioned that we must suggest the agriculture industry to build a powerful country. So, we'll further release the loans in these aspects. We timely adjust the strategy of party level loans and to actually up turn it to -- it to largely in the over annual plan of the level loans and increase by 60. And also, we will support the major project of the demand and focus on the manufacturing industry as well as some infrastructure projects including the transportation industry and the -- the areas of the cities we'll issue loans more and further the high-end advanced manufacturing industry to support these industries and support the low carbon green transformation.

Green in the future will have a promise, future agriculture back China. This opportunity to turn green finance at a more important position and to accelerate the innovation of Green Finance to the transformation of support, financial support of science, research, and innovation, the organizations, we'll follow the -- policies and the mechanism with the loans and the bonds, and we provide the high-tech companies with more channels, fundraising and source of capital. And also, we'll focus on the consumption business.

Now the consumption is restoring and recovering the market and to push the consumption. And China will continuously improve the credit placement in this regard to meet the demand of the public to high end flights. And in the home appliance, home decoration, travel, et cetera. We will enlarge the credit placement my side. Thank you.

[Operator]

Thank you. Vice president. Now please continue to ask more questions. Okay. This gentleman at the third row, the floor is yours.

[Unidentified Analyst]

Okay, thank you. I'm [Indiscernible] Morgan Stanley. I like to ask a question about revenue, you can see the recovery of the economy in the first half, but it haven't met the market expectation in such complex environment. What the driving force of the revenue, and also you talked about the growth and uncertainty. So, the second half was the major driving force of the revenue for the second half. What's your prospect? Okay, thank you. Please answer this question.

[Unidentified Company Representative]

Okay. Thank you for your question. For this question. I'm about to answer it now. For the first half revenue just now in our position, I've already shared part of it, and here I like to use four sentences to conclude. And the revenue is daily growing. The profit is quite sustainable.

We have prudent risk control and stable transformation. And in the first half of a year, we had a stable progress and that made a really good result of revenue and we have a stable increase to revenue for the first half. We efficiently deal with assets we pricing as well as fierce competition in the market, as a fluctuation in the finance market. We successfully deal with mitigate risk and just our operation strategies. We realize a revenue of RMB36 million with year-over-year growth of 0.8%. For this result, actually, it's successfully reflects our strategy, as well as agriculture back of China's resilience against the macro environment.

And second for the profit. It also increases stability, the first half by serving the royal economy. We also deal with the pressure internally and realize a good comprehensive operational result of the net profit, first half it is RMB130 million with the year-over-year growth rate of 10% to realize stable growth. And the third one needs about we have prudent risk control and we have forward stay in control of the assets quality to also have a really good control of all assets to solid – consolidate the foundation and to have a good control of MPL ratio of nearly about 1% and controls the MPL ratio. And we also have transformation, and we grab the opportunity, economic recovery, and got the markets opportunity and trend to also proactively push the optimization transformation of for the key sector.

And also, in the first half we service charge commissions increased by 2.5% Y-o-Y, and for the other increase revenue also increases largely. So, I think this is really not easy to achieve, and we've step by step to get more benefit from the transformation. And for the performance of the first half is not easy to achieve, and we proactively adapt to the complicated economic institution by enlarging the support to the major industries.

Our project fast growth in the first half the daily assets is about RMB35 trillion year-over-year growth of 18% and offset the part of our loss impact on the projected net profit, and also where the revenue we closely follow the change of the demand of the customer and also to push the development of the insurance business and also provide an in-house service capability of a legal person, customer, and civil growth of the service charging commissions. And we have also controlled the monitor of asset quality to have risk monitoring and risk control to stabilize the asset quality. At the same time, we actually also in the first half, we have the cash settlement about RMB16 billion.

The second one is about to stabilize our operational result. The next step, agriculture back of China will follow the strategies and policies of the central government to also -- the opportunity to continuously improve our work, to also work on the coordinative development, to also keep a stable profitability. And to make it more detailed, I think that there are five aspects and the 15 words and characters to share with you.

The first is to increase the placement and agriculture backup title will follow the macro policy, actively deal with to symbolize our growth and to further optimize our work and make more contribution. And also, we'll focus on the key areas to credit placement and to increase the credit replacement.

And second, we'll stabilize the revenue and that is we'll stabilize the revenue and to further optimize asset allocation as a credit business structure to further improve the revenue and combine with the market trend change to also have a really flexible adjustment of the rate and to improve the differentiated pricing and have a good control and to actually keep the rate difference within a reasonable level.

And the third one is about the first half, we actually have a really good revenue of the major business and actually, it depends on number prediction of the market situation. And there's good control of the strategy. And we will further improve the comprehensive financial service capability to further improve the stable growth for the service commissions and to further the investment portfolio to deal with the bond as well as the securities as well as the fluctuations of the metal and metal industries to have a really good control of the risk.

And also, we need to have good management of the credit cost and to have tight control of the risk in the key areas to conduct the risk -- to have a really clear reflection of the risk and also to make sure the credit cost was symbolized and keep controlling the limited level. And also, for the internal-external complicated situation which -- a challenge for us, require us to further nurture and ourselves in the asset allocation business structure as well as the coordination or in the credit cost, debt cost as financial expenditures.

We need to actually further improve our precision management capability, pose a high-requirements towards us. So, we'll continue to strengthen our management and to further improve our efficiency and to deal with the impact of uncertainties. And for this, that's all my answer for this question. Thank you.

[Operator]

Okay. Thank you, Vice President for your answer. And the third question, we would like to leave the opportunity to our colleague who join us online, and we will follow the sequence of the application time. So, first we will ask our staff to give the question.

[Unidentified Analyst]

Hello, I'm [Indiscernible] responsible for the investments. Thank you for giving me this opportunity to ask questions. I would like to ask a question related to the local bank and the local debt. So, I would like to understand the situation of the loans of the city investment corporation, and what's their performance, what kind of management policies will we have and how will we adjust the policies for them.

[Unidentified Company Representative]

Thank you for asking this question. I would like to welcome Mr. Wang to answer this question.

[Unidentified Company Representative]

Okay. Thank you. Thank you very much. And for city investment corporation loans business, we follow the requirements policies of the country level and we follow the compliance first [Indiscernible] optimization policies. And by the end of June, the City Investment Corporation balance account for about 5% of the overall amount. And the city investment corporation business have really stable development with controllable risk. Now the NPR ratio are lower than the average level, and in the future we're confident to keep this development, to keep a good stable development of loans in this regard. And so, it's based on two of our judgments.

The first one is about we have actually really good investment direction. We might have these companies invested in the water, electricity, travel, as well as the high-speed train, et cetera. Companies have a stable cash flow and long-term development potential. And at the same time, we have a regulated operation for every long of city Investment Corporation. We had due diligence as well as credit management, and monitoring -- flow of cash. We’ll avoid strangely about the use of other purpose. And we'll also follow the best practice. And by not increasing the local government debt, we can actually continuously support stable growth to the Shortboard and to feed and to benefit the public welfare.

And this year we'll also focus on the housing projects as well as the refurbishment of the areas of the cities, as well as these kind of projects of the city investment corporation.

[Unidentified Analyst]

Okay. Thank you for your answer. Now let's return back to the onsite -- to the site. Welcome the onsite audience to ask questions. Okay. Gentlemen, please. [Indiscernible] I’m palm strategic process and to economic and absolutely. Actually, the wealth management skill had a negative this year. So, I'd like to ask about this institution, how it's recovered, and about management a lot of people actually try to redeem their program. So, how do you interpret this and how do you look at the core competitiveness of your back? Okay, thank you.

[Unidentified Company Representative]

Thank you for your question. And we pay attention to the developments of the financial business and actually as a really important part to serve our people. Just not like what residents mentioned by the end of June, the personal customer increased to eight points -- and the amount is about RMB19 trillion first half the individual deposit by 1.9 -- personal loans by 400 -- we're racking the first among all the banks, and actually for the, in terms of the -- we're racking the racking the top among all the international. And we work on focus on the high-quality development of the management business to serve the individuals and customers and uh, actually the market a lot.

And we can see that financial management of the back actually risks and many experience downsides. I think that this means that in the past we actually have an exclusive way of development. This is already the history and adjustment cut back of China customers in further innovation in the management business, continuously optimizing the experience, and also to further provide better service. And there are four features we can demonstrate. The first is test development of the business, second is coverage of the customer.

And also, we have a strong power of serving the customer. And when we look at the business scale, we can see that was management amount restored and recovered. By end of June, the four-caliber amount is about RMB1.7 trillion and we're the top amount of the competitors, and we follow the principles to serve the customer to help the customer. And now for the wealth management customer, it's over RMB37 million and also -- and we focus on the inclusive finance and also provide over RMB240 million depending we enough the benefit for the customer.

And by the end of June for county-level customer was management customers are nearly 40%. And when we look at the product, and we actually are really professional and we continuously, which the portfolio and to provide balanced low-risk products to the customer. We forwarded and released the first batch of stable products, which were forwarded and preferred by the customer. In the first half we raised about RMB40 million -- and also for inclusive finance system are officially built.

And we actually have this kind of product over RMB35 billion service level. We follow the national strategy to both management business at starting point to make sure it plays a bigger and provide financial support to the real economy development as [Indiscernible] as well as early in the half and to as so, regions along over RMB90 billion and we can see that the most managements products in this transformation a really good amount. And it means that our products are highly recognized by the customer.

And the friends also mentioned the redemption situation last year. I believe that further was managed after the transformation the customer will seek to us. And they was selected. So, who can provide continuously sustainable service to them? And I believe that it will be reshuffled in this industry. And we provide service to safeguard the benefit and the customer and professionalism as well as stability and robustness are the core of our service. It's also our core competitiveness to safeguard the assets and wealth of the customer.

First, it's insight, capability of insight of the market. Actually, this is the core competitiveness. And first is we actually have a strategic development. And we also have a board, the same strategy that supports decision-making. And also, we have efficient and scientific management. And we need to have an investment portfolio strategy to support it. And for wealth management, the strategy of asset allocation and the macro and micro scientific efficient investment portfolio management. And the next one is about risk control capability.

The core is to provide a safeguard help and the protection of the assets of the customer. I think that for the benefit as well, actually, we focus on now prudent policy to also further enhance the compliance and risk control capability, and also use scientific research with the analysis model impairment. So, we have a flat management model to also improve the efficiency of the decision-making and to have a follow-up and follow-up on the market change. And for the next stage of the wealth management project. And I think that in the future for the backdrop management projects are a lot of things to improve and there are a lot of things to do in the future.

And it'll demonstrate, and diversify the competitive structure and to the ones who can provide. That means the customer's demand will stand out. In the next step, our focus is experts the wealth management solution to [Indiscernible] to the wealth of the customer and to use the prudent and robust way to customer and try to go a first-line asset management institute. And we will have a one-path suite development strategy. So, one indicates the high-quality development, and for the wealth management business, it'll help the customer to actually maintain or increase the value of – the asset, because I’m shifting their investments and benefits to realize high-quality development, and provide high-quality services.

On one hand, we need to the inquiries of the -- and in terms of the product, we need to compile this market situation to have a reasonable regimen of the regimen type of issuing a replacement. And also, we are at the internal circle and we'll actually allocate the right product to the right people to also set the right expectation to have a right expectation to have reasonable delivery, to avoid fluctuation, to have good cooperation with the customer. On the other hand, we need to follow and focus on quality, and with this background, we also know that wealth management customers find it really hard to accept the fluctuation. So, for wealth management, we need to also provide good support to the customer.

And we need to use a scientific way to further improve our level, to accompany the customer, to deliver the true value to the customer to further improve their benefits and improve their happiness for the web Class 3, those three means that to build the core support. And on the one hand, we need to build a specialized talent team and wealth management, we need to have professional people to do the professional things.

We need to work on professionalism to build and cultivate talent, to focus on investment management as well as marketing as well as scientific research -- scientific technology managers group. And to fully develop comprehensive professionals to further upgrade our product system. And also, to further enlarge the supply of the first batch management product to meet the demand of investment of the customer. And also, we need to further enhance the cut rural areas, and wealth management, especially for the senior citizen's service.

And third party are about to provide a professional service capability and to further coverage, provide a wide foundation and we'll continuously deepen the transformation to have a technology to empower the whole range of services to provide high-quality management and to make sure it's more inclusive, wide range public. Also, we provide test, service -- service, and high-end business. And for this kind of customer, its overall month is about RMB2.04 trillion.

And actually, it's in largely by 12 compared previous year. And I think that the back actually, this is an open platform for the asset integration and actually management is important and for the management and the capability to serve. The demand of the customer also drives the asset allocation as the service capability in the future. Management will continuously consolidate and comparative advantage and also to make sure we can also continuously improve the capability of service as of location. Thank you.

[Operator]

Okay. Now we'll welcome the next audience to ask a question. The gentleman in the first row, in the middle.

[Unidentified Analyst]

Hello. I have a question about inclusive finance, and I know agriculture back of China recently, largely inclusive finance coverage. And I like ask a question about inclusive finance, when you place and issue these products, what's a major field? And because with such amounts, you must have also some innovation. Also, share some of their innovation and in the future where you keep such a fast-growing pace and people also asset quality, how can you keep a good level of asset quality?

[Operator]

Okay, thank you. I'd like to welcome Mr. Liao to answers this question.

[Unidentified Analyst]

Okay. Thank you for your question. For the Agriculture Bank of China, we serve the real economy. We'll focus on and also focus on the SME as well as the farmers as well as the individuals and continuously to improve the placement of inclusive finance and to further enlarge the coverage to further improve the market entities, finance surveys, and accessibility.

And we can see that by the end of June, according to the central back collaboration, the inclusive finance balance is about RMB1.3 trillion compared the beginning of the year it increased by RMB700 million with the growth rate 129.5% according to the collaboration of the regulator. The balance is about RMB2.3 trillion and the increased by RMB50 million comparison the beginning of the year with the gross rate of 30.3%.

[Unidentified Company Representative]

I would like to answer your question in two aspects. Firstly, for Agricultural Bank of China, we'll follow the national policy related to the revitalization to serve the rural revitalization as put as our top priority to help with that Agricultural consumption, rural areas consumption, upgrading, and to further improve the content level, core competitiveness. And also, to preserve sustainable development. And also, for its overall business of ruralization, we have an overall introduction already from the vice president.

And in the future, we'll focus on three aspects, and it's about, can be concluded at three trading. The first trip in the first, the country level loans increased by 1 trillion with a balance of over 8 trillion compared with the beginning of the year increased by 13.9% and increased higher by 6.5% of the average.

And also, for compared with the beginning of the year, increased by 1.2%. It means that the county-level loans actually we are releasing the potential. The second training is about farmer loans balance in reach the 1 trillion and compares the beginning of the year increased by 33.5% and higher than 23% than the average and serve for farmers about RMB5.8 million. And for the full balance, it's actually increased by 15.6 compared with the beginning of the year with the grocery of 30%. And also, we cover over 30,000 farmers and accounts, and it actually demonstrates our policy of serving the agriculture as well as the farmers.

And also, we provide diversified financial products to meet the diversified demand of the customers and amount of wage. The county-level deposit, increase by RMB1.2 trillion with a balance of 12 training. And this also help us to serve the strong in agricultural policy and to provide a source of capital and capital.

We also strongly develop a level revitalization business as well as management as well as insurance business to support the management for the rural areas and also agriculture backup culture for the beginner’s mind of serving agriculture areas farmers. And we'll first enlarge our business in this regard to push the content level business high quality development. And the first one, we'll build more star products related to agricultural areas and farmers. Now we have over 200 specialized agricultural areas, farmers products to meet diversified fundraising amount of the rural areas.

The next step, we’ll continuously increase the products marketing and to build the rural areas support and to build the star products. So, for rural robotization and to make sure our products can improve to a higher level and to actually build the online loan service. And also, with the new amount of content level, customer will continuously us and develop and optimize and complete the product system. And also, we will serve the new innovative model of -- we'll have

For the customer amount, they reached about RMB3.2 million accounts and increased by 740,000 compared to the beginning of the year. And for the ratio of the loans, it's about 3.73%, and compared to last year it reduced by a dozen of VP, and this is a business institution. And next, I would like to share with you a few points that you care about. The first one is about for inclusive loans and it's about the field on where we place this kind of loans.

And ABC actually follows the policy of agricultural areas, the farmer's inclusiveness, and pushes this as a key link and the key areas and the major battlefield of inclusive finance. We'll play our role of serving the agricultural rural areas farmers to support the county level, and to fully play our potential to continue to support inclusive finance, support the revitalization of rural areas, and for the agricultural areas, farmers, this is actually the major one of the major increasing point of the inclusive finance.

By June, the Agriculture Bank of China inclusive finance loans, county level inclusive loans has a balance of RMB2.6 trillion increased by RMB47 million and account for 62% and the increased amount is about 63%. And this first question, the second question is about business model innovation. And I can answer it in two aspects.

The first one is agriculture banks continuously deepen the digitalization of inclusive finance and leverage big data, artificial intelligence, this kind of technology to provide support to the inclusiveness of SMEs to diversify the portrait of them, and also for the county level. For this kind of production line in these aspects, we actually focus on meeting the fundraising amount of market entities and, and the same time continuously complete online SME customers.

The inclusive -- the exclusive service platform to provide the appointment surveys for opening accounts, credit valuation, the management, and the process of the loan. And we provide one service to them versus SMEs and macro companies. If they don't open the country Agriculture Bank of China, you can also go to the inclusive finance station to apply for service online. So, this is about really convenience as well as accessibility of finance service to them.

On the other hand, our role of the wide coverage advantage of white coverage to build online, offline combined coordinated service with a digital method. We further empower operational the network to further improve the inclusive finance service capability of our 22,000 outtakes of us. And also, for the resource that for at the resource management capability. Based on this, we bought 200 -- to cover the high-tech supply chain manufacturing industries.

We have this kind of network to serve SMEs and we built the network to focus on inclusive finance to provide specialized service to micro companies and SMEs, and further increasing the amount of inclusive finance back China's focus on economic development has vulnerable groups to further enhance the placement of the inclusive and to offer credit structure and consolidate the inclusive business foundation.

And we need to make sure that -- all-inclusive finance increase amount is higher than the average of other loans back. And to make sure in the finance industry, the reform as shrink out are more and fair to benefit a wide range of public. And the question is about the quality for agriculture back of China. We follow the whole process control concept and data as artificial intelligence technology to further monitor the risk, identify the risk, and deal with the risk.

For the inclusive loans, we have risk control, and for the inclusive ratio are controlled in a really low level. And in the future with the recovery of the country and the well-sustainable development, a micro and SME, the theory of operational institution will be further improved. I believe that inclusive loans of ABC's overall quality will keep a stable development. That all thank you.

[Operator]

Okay thank you. And please continue with the question. The lady in third row, east region. The floor is yours.

[Unidentified Analyst]

Hello management team. Hello everyone. I'm the journalist from the – and I noticed that the asset quality is really good -- and your ratio, how do you look at this? And what's your take on this? And what's the reason of the improvement? And also, now we have credit expansion train what our expectations towards asset quality in the future are and how to balance the fast growth of asset risk control?

[Operator]

Okay. Now, we'd like to welcome the Vice President to answer this question, and we would like to welcome Mr. -- to answer this question.

[Unidentified Company Representative]

Thank you for your organization. The concern about asset quality by the end of June NPR ratio is about 1.45%. This is actually reaching the record and to tell you about the detailed numbers to validate it. And we can see we have a small pressure of response and the over rate is 0.9%, and also decreased by 0.09% compared to the year. And for its non-performing rate. Actually, for the legal person's loans, it's about 1.9% year-on-year drop. It's about 1.07%, and it's a key area. We kept really several growth and civil developments in terms of the retail industry.

For personal consumption loans, NPR is 0.9% and reduced by 0.6%. And the personal loans actually the NPR also dropped by 0.8%. And company loans actually NPR ratio dropped by 1.04% compared with the beginning of the year. And we can see we have a really balanced performance. And now for the provisional amounts, nearly RMB90 million, it's about 3 times of the NPR loans and the provision coverage is about 1.04%, and it's a really good level. And about your question about future expectations towards the asset quality, we're confident to make sure it's asset quality level.

There are several custom durations and first, we look at the macro economy. China's macro economy has strong resilience, and there is a really good change for it. And as a future policy is issued, we will have a strong recovery as an economy, and which actually provides good support to the quality of us. The second credit structure is continuously optimizing, especially in the key as well as the underdeveloped region we have a higher percentage. Also, we have balanced assets, and as we mentioned at the county level. So, loan increase amounted to over by China with incarcerated for 14% and higher than the average of other loans.

And we look at our own work, we continuously improve our credit management to further optimize the risk control capability, to further push the reform of the credit application mechanism, and to have good management of the source as well as continuous management after issuing the loan. And that's the reason why we can keep a good performance in this aspect. Also, hope has to further support the future stable development of further quality, and how to keep the fast growth, and how to balance the fast growth. That's what good quality, good asset quality. I believe this is all the best to achieve and we actually have a really good balance of the two.

I think that our measures, firstly, it's about in terms of the direction. We confirmed to the demand of national development and also confirmed that the national policy supports the rural revitalization of green industries, as well as manufacturing, as well as the public wealth industry. And in terms of the project screening, we follow market orientation and also to have a good management of our policy in the long term and forecast and evaluation for the customer.

And also, we focus on risk control, and especially for its management for different branches to have a risk screening pressure test, and to also have screening of the potential risk customer to also have good management of the non-performing loans. And also, in terms of digitalization, we first improve the digital management to push the -- for the models to use technology to further optimize capability. That's all thank you.

[Operator]

Now let's move the floor to the online participants. Now let's welcome the staff to arrange the online question.

Hello. Please ask your question.

[Unidentified Analyst]

Hello, I'm -- from UBS. Can you hear me clearly?

[Unidentified Company Representative]

Yes, no problem.

[Unidentified Analyst]

And thank you very much for giving me this opportunity to ask questions. I would like to ask a question about the rate and about the interest rate differential. I believe that drop-off differential, it's a wide -- it's really an issue for the whole industry. And for the second quarter compared with the first quarter, it's a drop further.

I like to ask that what's the major reason or driving for the drop of interest rate differential. And for the second half, what's the future trend and how can we deal with the further drop or try to avoid the further drop of interest rate differential?

[Operator]

Now it's welcome. So, the Vice President to arrange the answer.

[Unidentified Company Representative]

Thank you for your question, and I'll answer your question now. Where is the agriculture back of China in the first half? Where is the interest rate differential performance this year in the macro policy under the guidance of macro policy, the LPR was interest rate to have been done regulated, and actually the market situation also like this. Thus, the agriculture of China will continuously give concessions to raw economy continuously.

And then the first half interest rate differential is one point 66% dropped by 24 BP last year. And this performance compared with the overall trend in the industry is consistent. Monitoring the one with a big influence is about several factors that have a big influence on us. The first one is the LPR drop and was giving concessions to the royal economy. And the long ratio, it's 3.87% and compared with the last year, it's dropped by 22 BP. And the second one is about the bond market interest rate drop. The rate is 3.32% drop 4 BP compared with the previous year. The third one is a rate of Federal Reserve foreign rate and increased by 1.94% compared with the first half by 10 BP.

So, three reasons cause this to happen and also a drop of industry to different backup times in the first half. And where it's the next step, I think comprehensively consider the trend of economic recovery in China. The monitoring and regulatory body will drive to reduce the cost of fundraising for the economy. And this year we for two times down-regulated the LPR later we will face the adjustment of mortgage loans. So, we predict that the interest rate differential of back industry in the second half there some pressure of down rate downward since the next step, as you ask what aspect we can stabilize the interest rate differential.

I think for this question I can basically answer the question in three aspects. The first one, the second half will continue to work on the rural revitalization to provide a high-quality financial service to these industries and have forced the adjustment and too strong to guarantee a reasonable interest rate differential to push the circulation, good circulation of economy. And we'll do many following three aspects of work. The first is to continuously improve the credit structure, optimize the credit structure to further in the county level farmers inclusive credit placement. Also, continuously consolidate the individual loans advantage, increase advantage, and in zero amount structure price, and risk, we can have a really good coordination to realize the good revenue of the assets.

And second is to have coordinated development to also have a precise manage -- precision management for the loan pricing. And the ratio has been improved recently and actually, it will play a positive role for the future. And the same time, we'll fitting increase the management improves the management of low ratio loans in the long run to avoid risk and manage the risk. And the third one, Agriculture Bank of China seek to the deposit service to provide a guarantee for the real economy service.

By first and large the customer base with digital management, we can further build ecosystem and to accelerate the transaction back business and to help us to further classify, improves the capability of customer classification, to make sure we can close the loop of the capital to actually get more low-cost settlement capital.

And also, at the same time actually, with the market orientation of the adjustment, I believe the pressure of deposit will further be eased and we have the confidence to maintain the comparative advantage of the deposit ratio. Okay, thank you.

[Operator]

Now let's return back to the audience on site. Let's welcome to Lady the first row to ask the question.

[Unidentified Analyst]

Okay, thank you, management team and to serve the agriculture industry is a mission and also the comparative advantage, and also according to the national policy of the guidance of the financing policy to support agriculture development. So, what's your future policies on this regard.

[Unidentified Company Representative]

I would like to answer your question in two aspects. Firstly, for the Agricultural Bank of China, we'll follow the national policy related to revitalization to serve rural revitalization as put as our top priority to help with Agricultural consumption, rural areas consumption, upgrading, and to further improve the content level, and core competitiveness. And also, to preserve sustainable development. And also, for its overall business of ruralization, we have an overall introduction already from the vice president.

And in the future, we'll focus on three aspects, and it's about, can be concluded at three trading. The first trip in the first, the country-level loans increased by RMB1 trillion with a balance of over RMB8 trillion compared with the beginning of the year increased by 13.9% and increased higher by 6.5% of the average.

And also, for compared with the beginning of the year, increased by 1.2%. It means that the county-level loans actually we are releasing the potential. The second training is about farmer loan balance reaching RMB1 trillion and compares the beginning of the year increased by 33.5% and higher than 23% than the average and serves for farmers about RMB5.8 million. And for the full balance, it's actually increased by 15.6 compared with the beginning of the year with the grocery of 30%.

And also, we cover over 30,000 farmers and accounts, and it actually demonstrates our policy of serving agriculture as well as the farmers. And also, we provide diversified financial products to meet the diversified demand of the customers and the amount of wage. The county-level deposit, increase by RMB1.2 trillion with a balance of 12 training. And this also helps us to serve the strong in agricultural policy and to provide a source of capital and capital.

We also strongly develop a level revitalization business as well as management as well as insurance business to support the management for the rural areas and also agriculture backup culture for the beginner's mind of serving agriculture areas farmers. And we'll first enlarge our business in this regard to push the content-level business high-quality development. And the first one, we'll build more star products related to agricultural areas and farmers. Now we have over 200 specialized agricultural areas, and farmers' products to meet the diversified fundraising amount of the rural areas.

The next step, we’ll continuously increase products marketing to build the rural areas support, and to build star products. So, for rural robotization and to make sure our products can improve to a higher level and to actually build the online loan service. And also, with the new amount of content level, customers will continuously us and develop, and optimize, and complete the product system. And also, we will serve the new innovative model of -- we'll have that as well.

Based on this model, we'll explore the new models. We have multi-stakeholder its coordination, and on the other hand we'll work with the researchers due to as leading companies in rural areas, to have close cooperation with them, to jointly explore a comprehensive business model of ruralization, and to explore new and high-level customers of. Also, we will build and attract new customers and drive to build over 10,000 of credit village and credit systems to accelerate this process.

And also, in Digital Village as well as the cloud platform, we have over 96,000 customers settled and in 2000 counties we've operating. And now in the future, we will further work on the construction of a digital village and the cloud platform to have those three assets, management, consolidation, and [Indiscernible] as well as the agriculture protection custody service, to also provide according to the specialized agriculture rural areas scenarios, to further work on the rural areas build the new financial service scenarios for these customers. And that’s all my answer.

[Operator]

Okay, thank you. We'll continue with the onsite question, and gentleman in the middle area, the floor, yours.

[Unidentified Analyst]

Hello, I'm [Indiscernible] assets and I'm really glad to have this opportunity to ask question. And I would like to ask the question about the asset capital adequacy rate. Do we have a detailed target about it or do you have some future actions to further improve the capital adequacy rate and whether this management plan will influence the future dividend? And also, please, allocate the answering. I would like to welcome the secretory to answer this question.

[Unidentified Company Representative]

Okay, thank you for your answer -- thank you for your question. Indeed, with the Agriculture Bank of China to continue to support so aur economy. In the first half of the year, the capital adequacy rate dropped a little bit in the first half of the year. Now the capital adequacy rate is 16.25%. However, in the capital efficiency as well as the internal, external resource compensation, we're making improvements for activity and for the marginal capital consumption is dropped continuously by optimizing the capital amount has where the optimizing structure in the first half, the personal loan business, the increasing amount and increasing weight kept the top in the industry.

And at the same time, we first increased the national bond as well as the low-risk weight, low-risk part of the business and to further drive and control the risk. And they dropped by 1.4% compared to the beginning of the year. Now the ratio is 57.2%. The second one is about internal assets resource conversation. We have upward growth and you can see that so wide percent. When he introduced the performance, he mentioned that over the past year Agriculture Bank of China, short, really resilient performance and profit is about RMB130 billion with the increase of 6.9%, and net profit except for the dividend distribution, where further all these to further consolidate our capability and power. And also, for the external compensation, the first half we issue, the Tier 2 capital bound of RMB70 billion and in course rate of 0.3%.

And last week, in August 21st, we issued RMB40 billion of perpetual bonds with the rating [ph] 5.18%. And first asset management target. It's about compliance, a reasonable and adequate rate for the compliance. It means that it meets the regulatory requirements and compared with the beginning of the year in the regulatory body, when we ask for the advice, and by January the first next year, we will adopt new commercial back asset management method. And Agriculture Back of China will follow the requirements of the regulatory body to have a plan, to getting a step to follow the new regulations and high level to effect -- effectively express follow this -- philosophy. Philosophy improves the risk management capability according to management regulatory requirement for the Tier 1 capital as well as rates about 8.5%, 9.5%, and 11.5%.

And now the adequate rate of different Tiers of capital is confirmed to its regulatory requirements all. And secondly, it's about to have further improvement of the capitalization rate. By serving the high-quality development of the economy, we will continuously improve, and the further capital potential of the capital and to also deal with the project not compatible and to further have -- further assets distributed and allocated to the most needed area to make it sure we have appropriate match to meet the long-term development requirements of the back to help to avoid the risk, but we'll not blindly strive for a high capital adequacy rate level and we will serve several economy, meet their demand.

And based on the internal capital compensation, we'll comprehensively think about the requirements of the regulatory body and to think about the various reasons and elements to use a scientific way to also settle and decide the issuing plan and to balance the meeting requirements as well as the cost efficiency just I will think about to the dividend we can see that the investors, they actually strongly pay attention to the dividends of the publicly companies. In fact, since we're publicly, we always followed the philosophy of using cash dividend to return and benefit the stakeholders. And, we have a lot of investors and stakeholders they can jointly enjoy the benefit of development. And of our back.

Over the past decade, the annual revenue of the stock of ABC reached just 6.3%. And accumulated David then issued is about RMB76 million. And we had RMB15 million fundraising in the IPO and according to the level of 2022. The A share and H share the dividend ratio are 7.6% and 9.1%. This is about the dividend yield. And you can see this is a high level of return and it's the return having continuously improved, much higher than the National Treasure Bound, as was other wealth management products. And till now since our IPO Agriculture Bank of China's dividend ratio and the rate of dividend is over 30%. And with some business model, some people try to understand this as well as the capital adequate rates impact on the dividend.

Actually, this is not enough and we recommend you to look at it in another way and in a more reasonable way. I think that according to these facts, it's a stable dividend, we'll stable dividend in the future. And when we look at the revenue of commercial back, it's mainly used for the dividend as well as a compensation of for the assets and capital.

And we can see the dilutive effect and also, we will use it to benefit the stakeholders. Now the increase in amount so stabilize, but with the recovery of the economy, and the localization of supportive policies, I believe the future is really promising. And also, for the proficient coverage, it's now about 870 billion. So, we have solid foundation and we look at the capital. So, core Tier 1 capitals at the rate, now it's 10.4% in the future, and there's a dollar to improve. On one hand, we see new regulations, we forecast that our risk asset will decrease, it will further improve the adequacy rate, and the risk-weighted assets account for 57.2% of the overall asset.

And this indicator, we think that there's some room to improvement optimized, and it's also benefited to the stabilization and improvement of a Tier 1, core Tier 1 capital. We'll think about this comprehensive view and balance that [Indiscernible] as well as dividend to further improve the dividend and create more values to our stakeholders. Thank you.

[Operator]

And now, we'll continue with the onsite question. Now let's welcome lady in the first row on the right-hand side.

[Unidentified Analyst]

Hello, I'm [Indiscernible], and recently we should series of policies and the consumption demand was your take on the future trend of consumption demand and what will be the, what will -- what kind of future products and service we can provide to meet demand. Now also, for the adjustment of the mortgage loans rate. And what's your take on and what's your future profit? And this is actually two questions.

The first one is about the consumption. The second one is about adjustment for mortgage loan rate.

[Operator]

And now I would like to have our Vice President to allocate questions. I would like to welcome Mr. Lin to answer this question.

[Lin Li, Vice President]

Thank you for your question. Recently, we predicted the recovery of the economy, and also the macro policies will play a role this is the upward trend and consumption will further drive the economy and we will follow the deployment of the central government to serve the enlargement of the consumption. And we'll look at the retail industries is show really upward trend and those speaking, it shows actually four features.

The first one is in our back we follow the personal loans. We prioritize personal loans, individual loans, and also our personal already mentioned this. And for the inclusive finance as ion loans in rural and urban areas, we'll focus all of these and we'll build a comprehensive system with the talent to further have the marketing and to make sure we make contributions to serve for the recovery, and the retail credit increase in amount are taking the lead for three consecutive years and we have enlarged our customer base by step and we'll continue to improve the credit placement retail loans balance is for -- and increase in amount is about RMB400 million the higher growth of 5.7%. And actually, compared with the rest, we actually contribute to 35% for the mortgage loans, personal consumption, operational loans, and credit business. We had actually a faster growth. So, this is about the current situation.

And the second is about prioritizing the personal consumption service and by deepening the stabilization of economic recovery, we'll meet the market demand and we have a stable growth. And as for progress in the stable situation and to transform, upgrade the individual consumption loans and to embed the consumption scenarios. Take the consumption demand as a basic to serve the cultural tourism, electronic products consumption, green consumption, et cetera, coverage.

And also, we follow the demand in terms of the provision coverage, it's payment terms. So, we actually have a flexible adjustment to tailor the product to diversified, individualized the demand of the customer. In search, we'll continue to further improve the -- and support the auto industry, the industry, as well as to push the new vehicles to the rural areas and help with the home of the rural areas. And also, to conduct a series of marketing activities through covers online consumption, supermarkets, different scenarios to attract active users and customers, and also, we work on the customer classification to have a precise customization and precision marketing.

In the first couple year, the personal consumption loans balance is RMB900 billion increased by RMB70 billion. And the increased month is about 16%. And thirdly, we'll focus on the technology improvement online, offline. We have two channels integrated to pursue efficient development. For online, it's mainly about digital transformation. We'll push the digital finance and to build the digital service provide a comprehensive one-of-service solution to make sure the customer enjoys the convenience, utilize the data to make sure we can further improve the convenience accessibility of credit, and also credit line [indiscernible].

And for [Indiscernible] balance it's about RMB1.04 trillion interest rates of 21%[ph] balance is about RMB1.2 trillion increased rates of 46%. And we'll further work on the product and give a report after two months. It actually has its well excepted and prepared by the customer. For offline, we’ll leverage advantage of ABC and 20,000 net – as in China. We’ll further place and large the retail.

And also, we have over 20,000 pilot team in rural to serve the all round of life for the rural residents to come into the rural areas as well as the rural communities to provide customers with professional and inclusive financial service. And with the research and we continuously optimize the system and build the offline loans and to make sure that if you come to the back station for 1 time, you can complete the whole process of business loans. In the past I came to network for three times, right now, they can accomplish all the processes with one time.

And first we'll serve the public to benefit the public. On one hand, we'll also help to give the concessions and also the discount and to reduce the fundraising cost. And for the market ratio, it's dropped by 20 BP compressive previously was newly issued long. This dropped by 26 BP and for the personal consumption also dropped by 42 BP compared the previous year. On the other hand, we actually help to reduce the cost and help to improve the accessibility of the credit. And we have actually issued the business to provide the support to the individual to -- support and individual business and we also support the online application and to facilitate the process of loan application.

And we also will follow the beginner's mind of serving the people and to optimize our business to further improve the innovation as well as the strong placement of the rates and to support the quality development and improvement of the economy and to also show our responsibility as a big back. And the second question, I think, now in social society we focus on this question a lot. And recently the central bank clearly mentioned that they need to guide the commercial bank to adjust the ratio of a mortgage loan. And I think that this on one hand will benefit the people to actually reduce the burden of the exist mortgage loan customers burden, and also it will help commercial backs to ease of pressure to stabilize their operations.

In terms of the policy, after clarifying, we will follow and to set the detailed rules to prepare for the agreement to have a systematic adjustment to work on all the preparation organization work to be visit, and as stay to back the top back. We will stick to the policy. That's the house I used to for live in to not for speculation. And we'll try to do our best to provide regulated financial services to follow the national policies.

[Operator]

And next, we will have the friends from online to ask question. Please ask your question.

[Unidentified Analyst]

Hello, I'm an analyst from JP Morgan. My question is related to the green finance and we can see that in this part we have a good growth. I like to ask what's your advantage in green finance and what the next step and in the next step measures in faster growth. How do you balance the growth?

[Operator]

Now let's welcome the Vice President to allocate the question. We would like to welcome President, to answer your question.

[Unidentified Company Representative]

We'll follow the deployment, follow the policies, and we have the green genes by ourselves. And we actually regard green finance as one of our three strategies. And I think there are three features. The first one is increasing in the amount speed, creating a historical height. And by June the balance is RMB3.6 trillion [ph], increased by RMB900 billion by beginning of the year with a growth rate by 30%.

Its record height. And in terms of ruralization as well as the rural finance, we have good integration with the food security as well as these industries will add as a focus. And we integrate this with green finance at the end of June in green loans. Balance about RMB1.5 trillion account for 40% of the overall green loans and this is a record high and second one is about the diversified service of and fundraising will also reach a good result. And we continuously complete a multilevel and multilevel comprehensive service with the green security consortium loans.

We provide the loans loan about RMB770 million. And first one is continuously improving the system and to also involve this into different links. So, for process and for the equal friendly customer, we have a large report. And according to the national policy and the clean manufacturing policy, we put the green development indicator in our system. And for the regard has a rationale for us to as standard criteria for s selecting customers.

And second question future development point as well asset quality. I think, we have a fast development of the asset, but also, we -- capital asset quality in green loans. The NPR ratio is only point 58% lower than average. And there are several reasons and several factors. The first one is we have reasonable placement direction and this is a base and foundation of good quality. And in the six field, we actually have the green fields ratio. The loans over 40% new energy account for 30% and this kind of industry have a really good quality of asset and maintain has the quality of loans. And also, we have a reasonable mechanism. And for we Agriculture Bank of China, we strictly follow the sustainable principle and we are not have a green development for the green purpose. We strictly follow and monitor the flow of the capital to make sure this money I use in the green project.

And now we have a good -- also good risk management. This was support us largely and will continuously complete the screen specialize policy to make sure it's more precision and more accurate. The first one is communication to further improve the management level. And based on this practice of the Agriculture Bank of China, we further build the green financial standard and system more confirmed to the national level, international level, and with China characteristics. That's all.

[Unidentified Analyst]

Thank you. Thank you for your answer.

[Operator]

Next, we'll continue with onsite question, the lady from the first row please.

[Unidentified Analyst]

I'm from the China back insurance report, and just now you introduced about the situation of individual mortgage loans, and I like to talk about the whole estate industry. So, country released a lot of royal assets-related policies. So what work have we done according to it? And by stabilizing the rising market, what's your future actions?

[Operator]

Okay, thank you. I'd like to welcome Vice President to allocate the question. I’d like to welcome Mr. Liao to answer this question.

[Unidentified Company Representative]

Okay. Thank you for your question. For the royal state business for Agriculture Bank of China, we said firstly follow the central government's deployment and policy follow, and the shoulders responsibility, the top national country, top national back to proactively support the staple development real estate industry. And also, we'll make adjustment and optimize real estate loan supporting policy and to also work with the support real estate developers and to push the health and civil developmental industry, the work with them. I would like to give you a brief instruction. Mainly it's the following aspects.

So first it's about the support of the new model of developed model and real estate to follow the new trend for the affordable housing as well as the public housing. We will focus on all of these, the field benefits of public welfare, and by then the affordable housing loans balance is over RMB35 billion -- RMB350 billion, and the loans support the refurbishment, the area. It's also kept a stable growth. And we'll focus on the key areas, quality customers, to deal with essential demand as well, this kind of customer and to proactively support, and the reasonable fundraising demand of all kinds of raw developers. And another point is we'll follow the 16 measures. 16 items, and to provide adjustments or favorable policies for the fundraising to actually help to mitigate the risk and to help the developers have safety, sound development.

And also, we will provide the financial service to coordinative system to have a comprehensive of the risk and regular monitoring of the risk, and to follow the market to trend and in compliance way to regulatory regulation to practice support the local government to guarantee the house project delivery and to people's welfare and livelihood. And we'll follow the national decision making as well as national policies to follow, to support the development of real estate, to follow the change, change of supply demand relations, to further help the real estate industry to meet their fundraising demand and also support the quality help real acid companies to improve with their assets and debt and to improve their -- to improve their statement and to push the stable development.

And I would like to also share with you several of our key works. So first in the key link, we will support the new development model of the industry to push the real estate industry to contest, improve the support to the affordable housing, public housing, the refurbishment of the older neighborhood, as well as the commercial housing, and to support the public infrastructure building as well as the public welfare projects to support these to improve and improve people, living standard.

In the secondly, we will also provide the suitable policies to the cities accordingly to first of first developing regions like Tier 1, Tier 2 cities, as well as the major city. We will focus on the support of them and also focus on the interconnected region, the populous counties, major counties to support the stable development of the real estate industry of these counties. And also, we will focus on the management of defuse credit risk and to have the whole lifecycle management according to the regulatory requirement, according to the regulations, we work on the collateral to have good management of the mortgage loan placement and issue to manage the key links to form an efficient, closely loop risk management. And obviously we can – so over due to issue to mitigate the risks. That's all. Thank you. Please continue with the question.

[Operator]

So, lady on the right-hand side, please go ahead.

[Unidentified Analyst]

Hello, I'm joined securities, and I'd like to ask the question about the finance integration with the technology and what's your latest results in scientific or technology digitalization, transformation, and what's our future action. Thank you.

[Operator]

Welcome the Vice President to allocate the question.

[Unidentified Company Representative]

Thank you for your question. I will answer your question. Agriculture Bank of China, we use data as a mainstream to push the digitalization, digital transformation. We have a technology takes the lead to have a data in Paris to build the new model of smart back. And the first result I can share with you in five aspects. The first one is about the digital product system is being completed and for the online credit score being further improved by the end of June, loan balance is about 3.74% compare with the beginning of the year increase by 3%. And the CAGR over the past five years and three years is about 55%. And the innovation have never been stopped and the process have been accelerated.

Like the market -- like the product that [Indiscernible] mentioned, it's well accepted by the market immediately. And also, we provide [Indiscernible], which is a one of service to the SMEs. And also, we have the whole institution to serve the high-tech companies and the startups. For all of these product systems have been further. The second one is about digitalized agricultural areas is a farmer service, and it's been first developed and he does a balance is about so, RMB1 trillion increase by 36% and cover over RMB5 million accounts. And four is, three asset management platform in the rural areas. It's already been launched in over 1000 counties, and cover about 160,000 villages.

And also, we further deepen and penetrate and we released the 8.2 version of dying. And the palm back, the mostly active user is about 4,900 million in the first among the bats and the internet high frequent scenario ecosystem, we have about over 38,000 scenarios. And by have a centralized digital business operation center in Hefei which will put into usage. And we can see accumulatively, it can help to save time of the network by over one minute of hours. And we have a strong improvement of the digital risk control capability and the digital management platform have been launched, and we have also the online risk control field and for its accuracy of the model have been further improved over the past years.

And the NPR ratio of online loans, they have been kept in a reasonable level. And at the same time, based on the digital control center, we build a centralized operation as well as the white coverage of risk alarm and refer them proof with efficiency of risk, alarm disposal, the infrastructure helping further, high-quality data assets have been further allocated and for the decision engine system as well as artificial system as well as platforms, basic service, we've already been widely used and for the decentralized as well as the cybersecurity work, helping for improved and largely support our digital transformation.

Next step in agriculture back of China, we'll follow the, and grasp the resource of data to take the of data and to better push the development of the business. And we'll focus on those three aspects mainly. The first one is about to lay solid foundation of data resources and with the comparison way to also introduce the external datas of rural areas, the agriculture industries, the commercial industries, et cetera. And from the perspective of the companies with the standardized construction. As a starting point, we'll optimize the data middle office to further improve the data service capability to serve the data usage demand of the transformation in the whole back.

And the third one is to deepen the application of data to fully place a role of data in serving the customer in credit placement and risk control in these cadences to further data plays a role and to further improve the data digital operation capability. And by reducing the amount of manual reports as well as the paper document, we can further leverage data and the technology to the lower level to make sure in the frontier and lower level they have more benefit of digitalization.

And third, we'll push online offline coordinative for operation with data as abound to further strengthens the whole channel business coordination, marketing coordination, and to close the loop and connect the -- to make sure the online advantage as well as the advantage of online, offline combined to form a customer centered on offer integrated as well as the traffic value convertible structure, therefore thinking.

[Operator]

And we had such a sufficient discussion. So now we are a little bit overtime, but we will still allow some time for the participants joining us online. We would like to select one question that we haven't covered yet. So now, let's welcome the staff to present the question.

[Unidentified Analyst]

Now I'd like to read the question and the technology science are a major link and for your back, what kind of resource do you allocate for the startups and in the financial service for this aspect? What policies or mechanism could share with us?

[Operator]

We'd like to welcome Mr. vice president to answer this question. Mr. -- answer the question.

[Unidentified Company Representative]

I'm very glad to have this question from the internet participant for technology start financial service in the innovative financial service as well. Service mechanism to provide support to the technology and innovation, to allocate more resource to support high tech companies to startups to for development end in Agricultural Bank of China, the High-tech companies loan balance, low amount covers over 50,000 accounts and there was increase amount of over 20% and over amount of NPR5 trillion.

And when we talk about resource allocation can be demonstrated in the first one by building a specialized organization and team. We can -- for example, improve the specialized empowerment capability, and also the service efficiency. Now in technology innovation where active regions like this kind of regions, we already established 19 service centers, financial service center, and in the industrial park, high tech zones. In these kinds of concentrated areas, we already established over 200 high-tech financial institute or the branches.

And for single, we will further improve the evaluation of loans in terms of the rate setting. We will provide some verbal policies to further help with credit adequacy of this batch of company. And in innovation, we have the order-based transaction and also the revenue conversion expectation, and also build innovative model to provide the high high-tech companies with a good accessibility and provide diversified products and to provide favorable policies and the differentiated policies in all the aspects.

The first one -- in terms of the innovation products aspects, we forage the specialized products and we have the investment and the loan combination online support environment, credit company, credit combination kind of proprietary products for high-tech company, for its startup tech companies. We delivered the -- we work with the equity investment -- equity investors to combine with them. And for the micro companies. We also have the guide product for them. And the first aspect is about the equal service. We benchmark with high tech industrial development zone to combine the strategic emerging industry cohort to start with a point to cover the whole area and to further improve industrial chain, supply chain industry, and upstream integration to further improve the long accessibility for high tech startups.

And in equity investment, we integrate and activate external resources and to allocate all the elements and resources to also the role of the media and the intermediary. And by June, we've already talked with over 80 investors, including insurers, the asset management, PEs the national investment platform, PE, et cetera. We also work with the equity investors to also work with the financial consultants, evaluation agencies, and to organize a service consortium to provide a comprehensive service.

The next step, Agriculture Bank of China will join by seven next to conduct our service. So that is about new customer, new structure, new policy, new product, new guarantee. In these aspects, we will work harder and to further improve the match and the benchmark with, to provide the adequate service to the high-tech company to make sure that we can actually support the development of this company to build a credit system, to push the high-quality development of this industry.

And to put last story short, we will do the work in the four aspects. The first one is to further complete the service system to improve our operational capability, the credit service capabilities, the price competitiveness to serve the high-tech companies at different stage and with different fundraising demand. And in serving the key regions, we'll continuously serve the reform, the building of the pilot region to build the ABC high-tech financial business pilot, and examples.

The third work is to upgrade the credit service to fix the future and to focus on the future repayment capability, to evaluate the high-tech company, and to build the high-temp company proprietary inclusive, exclusive credit products and system. The first one is to complete the service to continuously develop the financial product to optimize the original product innovative policy and to meet the whole lengths demand to actually have -- meet the fundraising demand of the whole lifecycle of the high-tech companies.

[Unidentified Company Representative]

Okay, thank you for participating, the ABC 2023 interim results announcement.

[Operator]

And thank you for your continued support and care of us. And thank you to the management team for your interpretation of the performance and for your answering of the questions. In the later stage, if you have any questions, please contact us afterward. And here's the end of the 2023 interim results announcement. Thank you for all.