Bank of Communications Co Ltd
SSE:601328
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Bank of Communications Co Ltd
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[Audio Gap]
And the second feature is improved credit structure to serve the rural economy. Loan to customers before provision reached RMB 4,852 billion, an increase of 5.96%. The [indiscernible] are 42% from the year of the previous year are above the total loan growth rate. The green finance and businesses relating to agricultural farmers and rural regions received robust rural support. And we -- our operation mentality further relieved through promoting reform in risk management, HR management and IT and enhancing the operational authorization system. Pretax profit before provision of the fixed major business and trusts increased by 12.74% year-on-year.
Personal AUM increased by 5.37%. The number of qualified customers for BOCOM Wealth Management, OTO Fortune and private banking increased by 4.3%, 10.15% and 10.24%, respectively.
And we have a stringent risk control and compliance management. The impaired loan ratio was 1.49%, down by a 0.01 percentage points from the end of the previous year.
The overdue loans and 90 days overdue loans kept decreasing. Balances decreased by RMB 9.79 billion and RBM 11.18 billion, respectively, from the end of the previous year. Provision contribution was 171.09%.
This is a summary of the balance sheet, EPS and the major financial indicators. And we can see, we have seen us steady growth over the loan to customers and deposits, and also a good momentum and good growth for the next interest income and net fee and commission income. As for the major financial indicators, the ROAA was 0.83%, increased by 2 bps, and ROAE was 11.96%, up by 52 bps. CAR 14.08%, up by 8 bps.
And the second part is about the business review of the first 3 quarters of this year. The first part is about the corporate banking businesses. We have been serving the real economy and the major country's polices. The corporate deposit increased by 2.22% to RMB 3 trillion -- RBM 3.9 trillion, and the corporate loan increased by 2.4%. As for industrial chain finance, the qualified industrial chain network exceeded 3,000, and financing balance of major industrial chain financial products exceeded RMB 100 billion, representing an increase of 11.88%. And as for cash management, the online group company customers of e-channel cash management totaled 20,400, involving 372,500 cash management accounts. And as for the inclusive finance, the number of customers with loan balance increased by 11,890.
The investment bank underwrote 276 bonds. And as for asset cost of the businesses, the scale of asset costs RMB 8,840 billion, an increase of 7.45%.
And as for the personal businesses, we have been adhering o the mindset of financial technology for the mass individuals, and we have been promoting the building of a smart wealth management bank. As of the end of the reporting period, the personal deposits increased by 4.55%, and the personal loans increased by 13.94%. And we have been upgrading our smartness and digitalization and the online businesses of our wealth management businesses. And we have promoted the [ My Steward ] online customer services mode, covering more than 7,000 client management -- managers across the whole bank.
And for the credit cards and debit cards, the total number of the credit cards was 70 million, with total spending growing by 40%. And the debit card number was 140 million, with the total spending increasing by 13.74%. And the inter financial business -- financial institution businesses, the investment securities increased by 9.97%. And the -- as for the interbank businesses, the number of online bank customers of interbank smart channel and interbank wealth management platform increased by 453 from the end of the previous year.
The balance of margin depost is of futures trading funds reached RMB 91 billion, maintaining a leading position in the market for the ninth consecutive year. The daily average balance of net value-based products is RMB 111 billion, increasing by 35% from the previous year.
In the precious metal, we have been maintaining the leading position. And the scale of physical precious metal products amounted to RMB 1.97 billion. The important part is about the dual channel building. We have been aiming at achieving integrated and coordinated development of online and off-line service channels.
The number of the registered online mobile customers reached 7,000, increasing by 16%, and the transaction volume through the mobile phones increased by 21%, with the total volume growing by 50 -- more than 50%.
The corporate online banking number grew by 11.71% and the transaction for the corporate online banking increased by 11 -- 10.54%. And we have reduced the lining up time by 6.35 minutes.
And as for internationalization and universal banking, the net profits of overseas institutions grew by 1.53%. And the net profit has increased to RMB 4.4 trillion. And total net profits of holding subsidiaries increased by 11.42%. The total assets of overseas institutions increased by 11.9% to RMB 1.08 trillion. The total assets of the holding subsidiaries increased by 12.46%.
And the next part is about the risk management. We have paid relentless efforts to preventing and mitigating financial risks. The ability to serve the real economy was improved. The bank actively responded to national stratagies and major products and scientifically managed product expansions. We achieved reasonable growth in new product and increased expansion to key areas. The liquidity coverage ratio reached 109.39%, meeting the regulatory requirement and the loss ratio of operation was within the range required by the regulators. The bank inspected the businesses for large corporate customers, governments, real estate and large collateral and proactively responded to external -- internal finance and illegal fundraising risks. And we think that was used to promote risk management, and with also the initiative to build a risk data application ecological system for the group and built a uniform risk management system. And management value was created through risk management. And we have a dynamic balance between risk and return, and it's promoted a good selection of target customers and supports the high-quality development.
As to asset quality, where there's favorable momentum, the balance of impaired loans of RMB 72.2 billion, the impaired loan ratio is 1.49%, among which corporate is 1.77%, up by 0.11 percentage points. Personal impaired loan ratio is 0.93%, down by 0.2 percentage points. Provision coverage -- our provision ratio is 2.5%, while provision coverage ratio is 171.09%.
As for the outlook for operations, we -- this complicated market will continue to focus on the change of the external environment and enhance our efficiency and competitiveness set to increase financial service efficiency, with continued focus on serving the real economy, focus on national economics development and strategy and creating increased financial support for the [ draggy ] emerging industries, optimize the credit structure, include the operation of inclusive finance. Second, adhere to the philosophy of prudent operation with continued efforts in risk management, strengthen the precise management and control of key risk areas and improve risk management capabilities in mutual dimension, deepen the reform of risk credit management. Third, promote the innovation and the application of financial technology and build new advantages in competitive development to strengthen scientific and technological empowerment and to make steady progress in this market transformation with new information systems, improve the efficiency of online and offline integrated services. Fourth, implement the strategy of internationalization, integration and wealth management to excel transformation and development due to an integrated operating platform for investment and financing, combining domestic with overseas, enhance the quality and efficiency. So this is all for my introduction. Thank you.
Thank you. Now the floor is open for questions.
First, Huatai Securities.
I'm from Huatai Securities. My questions are as following: first, was -- is about NIM. So in the second quarter -- or in third quarter this year, the NIM has actually improved quarter on -- by 6 percentage -- bps points. So what are the factors contributing to the NIM? And what is the cost for your asset set and the liability? And what is the yield and cost for loans? The second question is about asset quality. So previously, you have introduced the key status for impaired loan ratio as they -- which have been stable and improved. So in terms of the overdue loan, what is the number for those under and above 90 days? The third question is still around the NPL. So what is the write-off, newly increased and addressed NPL in the -- for the 3 quarters? Next question is for the profit enterprise in Jiangus and the Zhejiang provinces. Have you seen more NPL is growing in the second and the third quarters? What is the recent trend in this part of the country?
Thank you. The first question will be taken by Ms. [ Guo ] from the Finance Department. The second question about asset quality will be taken by the -- Mr. [ Jiang ] from Risk Department, and your third question will be taken by the -- by Mr. Fu, the Director of Corporate Institutional Business.
So I will answer your question about NIM. In -- previously I have already introduced that the 6 basis point quarterly increase, actually, it has increased by 14 basis points comparing with the second quarter. So we -- so on the one side, we have increased the asset yield, and on the other side, we have reduced liability cost.
So in terms of liability cost, we have optimized the liability structure. The interbank liability cost has increased by a large margin and stayed around 3.15%, down by 12 basis points. In terms of liability cost, we continue to consolidate our client base and enhance the service efficiency and expand business in cash management and to -- so as to expand our low-cost liability and stabilize the percentage of current deposits.
Second is to reduce the -- second, the interbank liability cost has also been reduced. So right now, we are at a favorable market with ample liquidity. So it is exactly the time to get low-cost liability. And we have also made a good effort to reduce risk cost. So we have enhanced the collection and reduced our cost.
So this is about the liability cost, and that's why our NIM in third quarter is better than that in the previous quarter.
Next, first question will be taken by me. By the end of September, the overdue loan has been reduced and the percentage is also being decreased. So in terms of the asset quality control, we have made great assets, not only to overdue loans but also to the default collection. So there has been great improvement for BOCOM. The overdue loan is 11.85%, which is down by 33 percentage points. And overdue -- above 90 days have also been reduced. By the end of September, the above 90 days is -- stands at 11.35%. There has been a large decrease comparing with the end of 2017.
And also, since the beginning of 2018, we have continued to improve the write-off. And there has been a large increase in terms of write-offs, and then that changes the Chinese commercial banks. So based on our demand, we have continued to reduce the NPL. And -- so as -- so that we could have larger assets or could have a larger base with which to support the good economy.
And as for the Jiangsu and Zhejiang private corporate, for the private corporate, I think, they really faced some difficulties in the funding and the financing. And in the second and third quarter, in this region, the private sector's NPL is actually mainly in the existing risk asset.
In recent years, actually, our client structure has changed. We continue to choose good-quality clients, so the risk exposure for the profit sectors in Zhejiang and Jiangsu province is not quite large for BOCOM. And also, we are on high alert. We continue to improve the risk monitoring and risk management so we could reduce the risk in advance and to reduce the pressure on the asset quality.
I'll take your third question about the structural product sector. Actually, as WT premium [ Mr. Liu ] has mentioned, the contribution of private sector should be commended. It has quite a great role in China's economic development. And for Bank of Communications, the private sectors is also a very important client base for us. Among our balance, it contributes around 25% of the corporate loan. By the end of September, our balance has grown positively on a yearly basis based on the State Council's requirement in future where we'll further increase our support to the private sector. We will, on the one hand, refine the industry -- credit industry policy for the private sector where we'll continue to refine the risk management. So we could categorize the clients and adopt differentiated credit policy to these clients, and we will mainly focus on the top corporates in the key industries for some core -- and core clients and innovative clients with large growth potentiality.
Second for the corporates in temporary difficulties, but still has -- have still -- have found -- so we have potentiality in future with good products and the market share. We will not stop or reduce the loan to these corporates. So we could hold them to overcome the current difficulties and achieve sustained development. And certainly, we improve supply chain finance so as to support the SME. Also, I think the beginning of 2018, BOCOM has adopted the new IT system. And in this system's buildup, we will continue -- we will use big data and technology tools. So we could -- and we will apply the technologies to the SME business and improve the risk management for these corporates to make credit resources more accessible to the private sector.
Next, Mr. Chen from [ Tuo ] Securities.
So I'm from [ Tuo ] Securities. Focusing at the banking industry, I have 2 questions for the management team. The first is about next year's outlook for the banking industry, so the interest rate for the loans and the deposit rates. And second is about the -- a more robust, physical policy. So what is the pipeline of the projects for the -- looking ahead?
We will have the director of the financial institutions business, Tu Hong, for the outlook for next year's banking industry.
I'm Tu Hong, responsible for the FI businesses and financial market. So as for the first question about the outlook for the macro economy and also the interest rate for the deposit and loans, so this is about the pricing of the next years market. According to the latest policies and also the arrangement for -- of the central government, we know that by the end of the second -- by the second -- by the end of the July, we had a central government conference to promoting the macroeconomy, reducing unemployment. So we have seen different scores of the economists have based their opinions about the macroeconomy for next year. They believe that we will face major difficulties, and we will see the repercussions of the policies issued in previous years. And dramatically, we think we still face a very complicated situation, but that does not necessarily mean that we will all face a decline of the macroeconomy. And for the major economic indicators, and we have seen the trend of the money market and the bond market. Technically speaking, we will face complicated market environment. We have both the momentum for upward or downward trends. And overseas, we have seen the trade tensions between China and the U.S. This is also the salient feature of the international trade. The U.S. dollar is still in a interest-high trend. The new head of the Federal Reserve, regardless of the requirements of the Government of China, they have raised the interest rate, and the raise will be -- likely be twice next year. If the U.S. rate increases, and the U.S. 10-year bond currently is 3.2%, and now China's 10-year bond is 3.7%. So the difference between the U.S. and China 10-year bonds has been maintained very stable in previous years. If the rate increases of the U.S. dollars, then the spread, the difference will be larger, and this will impose challenge for the China side.
So for the rate, the real economy, they still have a robust demand for the lending, and we have seen the achievements and results of the deleveraging. We have seen more results from the policies. The shadow banking has been removing. So the credit demand from the shadow banking will be shifted to the normal channels. So we will see a robust demand for the lending deposit credit. This is also in line with the policy of the central governments requiring the conventional channel for credit. So the banks should also take measures to better serve the SMEs, to decrease the low funding costs for these companies, to better support the SMEs in terms of their bond issuance and other funding arrangements. So the pricing will be stable, but there will be a slight increase for the pricing.
For the CBRC, the benchmark rate, so the demand and supply of the funds, the deposit has been facing some challenges. It's no long -- the funding sources for the corporates and the individual deposits have been facing some challenges. So we will see a more strict environment for the deposit and the loans. And for the interest rate for the loans and deposits, this -- there are 2 sides of the coin, which is -- one is liability one, the other side is the asset. And the Governor of the PBOC, Mr. Yi Gang has stated that facing the financial crisis and also trade tension, we have many measures, including decreasing the RRR and other monthly policies. The deposit rate -- the -- we have -- the financial institutions have their own discretion, their own power in pricing the deposits. So there has been a ferocious competition among the banks. So we think the deposit rate will also grow higher.
I will answer your question regarding BOCOM's response to the central government's policy to better serve the real economy. The Central Government has pointed out that we should better serve the real economy. And for our bank, we have taken several measures, and we have seen concrete results. We need to increase the credit of the real economy, and especially for our pipeline projects.
Again, in the beginning of this year, an addition of RMB 70 billion investment was the local government's bond. And we have some special loans, about RMB 38 billion, for the major products. For example, we have supported the Qinghai Tier 1 road and the light rail project in Jilin Province. And we're facing the -- end of this year, we pay heightened attention to the storage of the pipeline project. We asked the branches to better serve the real economy and to start more projects for next year, especially in the area of infrastructure, transport and areas with people's livelihood. We have asked the branches to screen those projects in these major areas. The major projects in the pipeline have been exceeding 1,000. And the demand -- the volume will be -- and we have -- and the total volume would be RMB 200 billion, and we think we still have a very ample products in the pipeline.
And Mr. [ Duke ] from Deutsche Bank. Two questions today. First is about the quarter 4 and next year's asset allocation and second is about the asset quality moving forward in 2019. Do you think such areas, apart from the Zhejiang province or other retail or some major certain industries that we should pay special attention to? So about the trend of the asset quality.
First question, we will give the floor to the Asset Liability Department Head to answer the question. The second, we will have the Head from the Risk Department.
Regarding the asset allocation, the asset investments, who has developed the conditions of the end of the first 3 quarters. And for the last quarter of this year or the next year, we think we'll keep the trend of the previous 3 quarters. The loan grew at 6%. The -- and in the previous 3 quarters, we have better -- we have suddenly increased credit to the real economy. And our total loans will be increasing by RMB 330 billion, up by 8.5%. And we increased our exposure to the local government bond. The balance of the local government's bond was RMB 940 billion. And it is expected that by the end of this year, for further -- we'll have further investment to local government's bond. And also, the bond return would be exempt from tax. So this is a -- but this would be also a conducive factor for our profitability. And in terms of the structure of the credit expansion about the corporate and personal banking, we should balance the corporate and retail demand and we will have an increased resources expenditure, the retail businesses. For example, the credit card businesses, we have increased the extension to the credit card, and also the mortgages and also in terms of the optimizing the structure. About the asset securitization, we have also increased our efforts in the asset securitization that's in compliance with the regulator and also increased our development in businesses. For the property market, we have 3 batches of the mortgage loan ABS. So this is a major measure for -- of our bank to meet the demands of our customers. Regarding asset quality, next year, we're watching closely this problem. The external environment has an increasing uncertainty. Our banks have been in high-risk industries, many located in Shandong and Western provinces. In this year, we have major pressure in decreasing our exposure to those [ lumpy ] enterprises, especially in the Northeastern part of China. And looking forward, apart from these high-risk regions, we should pay more attention to China and U.S. trade tensions and some other long-term factors. And for the coastal export-driven companies in the coastal areas, we should pay heightened attention, for example, companies in Guangdong, Shanghai and Jiangsu. We have seen an increasing -- so this company is in these regions for they will feel a long-term impact of the China and U.S. trade tension. In terms of the industries, our bank, the newly interest loan don't concentrate in manufacturing and retail and other conventional high-risk industries. The NPL, the changes over the industries, they haven't seen a drastic difference and we will continue to pay our heightened attention to these high-risk industries.
Next question is from HSBC.
I'm from HSBC. My first question is about the funding sources. I think it's quite difficult to get more deposit and so the Central Bank -- and also the liquidity released by the Central Bank can actually hardly translate to more deposit in the bank. So I wondered about your funding sources and your outlook for 2019. The same question is about the growth of loan and also the pricing strategy. Of course, as you had mentioned, you will support real economy. So is it possible that the loan growth which will continue to increase? And the third question is about your investment in the municipal bond. Actually, there has been discussion about the risk weighting, 20% to 0%. So what is your view on the writers' attitude towards the risk weighting of municipal bond? How can you avert the potential risks?
From the previous 9 months, we can say that the funding sources and the funding usage has been stable and the asset has grown steadily. In the future, we will continue to absorb stable and low-cost funding so our core liability or stable liability could come from multiple channels. It could be the general deposit, also could be the interbank deposit. So in China, the funding market has been quite -- So I think it's more important part of stability of the market and we will compare different indicators to decide on the strategy. So in the future, we'll continue to improve the stability. And I think the general deposit will be more stable for us. And in the meantime, we will also absorb deposits from the financial institutions and the [ adamant ] markets. The [ funding ] source is based on the Central Bank's monetary deposit rate. We will continue to absorb -- actually, the Central Bank will also release fundings through mutual tools and it will provide the funding -- also funding sources for the commercial banks. And for the -- and also, our deposits have grown stable in recent years. So operation is also based on the capital restraint, client's demand as well as our future strategy. So to BoCom's perspective, our capital adequacy ratio by the end of September has been increased comparing with the end of 2017, in spite of the asset growth of the bank. So I think we have the conditions to continue to grow the loan book, but we must make sure that the loan extension will be given to the industries with yield. We will not have higher than expected loan growth next year. In terms of the macro policy, it's also the same. The Central Bank will not release a huge amount of liquidity. So from BoCom's perspective, in terms of loan growth, there will not be -- it will not be out of expectation. We will still focus on the stable growth of main. And as for question about the risk weighting for the municipal bond, I haven't released any official information. I understand that the media has been discussed, but it will be reduced from 30% to 0% for, but I haven't heard anything from the regulators. We're not sure about the future development. But of course, the reduction of risk weighting will be quite good information -- quite good news to us. This will help us to grow the capital adequacy ratio so we could allocate resources to other areas. So these are my answers.
The next question is from Bank of China International -- sorry, the next question is from Crédit Suisse.
I'm the analyst from Crédit Suisse. My question is about the wealth management subsidiary. We feel that we have already seen the government's draft for the subsidiary and I wonder about how is BoCom prepared. And when will this subsidiary be officially launched? And for the nonstandardized wealth management product, I think the regulatory requirement has been kind of relaxed, but it still have some requirements about the matching of maturity. So what is the view on this perspective? And how do you address the mismatch problem?
Thank you for your question. The first question will be taken by Mr. Tu. The second question will be taken by the Head of -- at the Management Center.
The first question. I think I must correct you here. For the -- as a management subsidiary, we have made a decision to make the application but the regulator hasn't made any official approval. So the subsidiary could not be officially launched right now. But the IBRC (sic) [ CBIRC ] has released the regulation on the draft for this subsidiary management. Actually, from BoCom's perspective, based on our prediction of the development just as a management industry, we think that right now the general public, [ no matter ] interest of individual corporate-owned institution all have strong demand for wealth management. So for the IBRC (sic) [ CBIRC -- ] based on the regulatory statistics, the asset management size is already very large. The balance sheet wealth management product is around to RMB 2 trillion to RMB 2.5 trillion. So we think it's a market with large potentiality. And for BoCom, one key element of development strategy is about wealth management. So in terms of asset management, BoCom will allocate enough resources to support the potential asset management subsidiary. As soon as -- we hope that we can be one of the pioneering wealth asset management subsidiary. And we will learn from the international asset management corporates under our banking group.
[ Please, Stance] for JPMorgan.
For our shareholder, HSBC, their asset management all contribute to a large percentage of the group's profit and their revenue. So all learning from this international experience. And in the domestic market, we are actually one of the top market player in asset management industry. So we will -- we hope that this subsidiary could operate successfully. They ask to remind you again that subsidiary has not been approved by the regulator yet, and I think it's a new sign in the market. There will be a lot of difficulties but we'll try to overcome all of these difficulties.
The second question. I'm from the asset management center. I'll take your question about the nonstandardized products. Based on our understanding, the new regulation is about compliance and moderate. Another instance of the WMP management from CBIRC or the draft on the management-held asset management subsidiary, all focus on these 12-point set. But it has a limit on the proportion as they announced their product. It is 35% and 4% and 40 commercial banks. And on the draft, the requirement is 35%. So the regulator, I think they proved the compliant development of nonstandardized product. So the second part, as for the compliance, for this product, the matching of maturity is required. So this is -- so I think that's just the way the regulators will go in future. So -- and that's a long time. And actually, for BoCom, in recent years, based on the Central Bank kind of CBIRC's requirement, BoCom has allocated more resources on the standardized WMP. Those are one of our signature strategy. So while our investment structure, the standardized product was the large -- greater percent -- greater proportion. The nonstandardized fee is less than 15% of the total portfolio. So it is still much lower than the 35% regulatory requirement. And comparing with the other banks, I think this is a quite low percentage. So this has laid down solid foundation on the future transformation based on the regulatory requirement. But I think it's one of the advantage that BoCom has. Based on the new regulatory requirement, there should be some change made on the nonstandardized product. So we are also making trends to go through the transitional period where we'll issue new product to go through this transitional period and it will also transform softly nonstandardized product to the standardized product, and in future, for the newly added nonstandardized product. So with thing set in the -- under the status quo, China still encourage the nonstandardized product, which could contribute to the development of economy. So we will still keep part of the nonstandardized product portfolio. We're looking through the future and the continued trend on our standardized product portfolio, including bond equity and commodity. And we will also enhance our research capacity. So our investment capacity and research capacity of the standardized product could be our core competitiveness.
Thank you the analyst -- to the analysts and also to the senior management presented here today. So the last question from the Bank of China International.
The first is about the asset quality. We have seen there was a major difference from the end of the second quarter and third quarter, but will you think some export-driven companies or do you think about the changes of the operations? Even for the others, the numbers of others are affected. And also, the futures will need to invest. Do you think their [ willingness ] are declining? So how will your bank respond to these changes? And for the proportion, the exposure to the export-driven companies in the total loans, apart from the manufacturing industry, what are the other industries you have exposure to? And also your core business system building, can you elaborate more on that? And also, what is your investment amount into your IT system upgrading and when will it be completed and when will can see a major improvement on the indicators resulting from the upgrading of the IT system?
So the first question will be answered by the risk department head, [ Mr. Chang ].
So about the China-U.S. tensions and the impact on our bank, we are watching closely about these tensions and also the impact as we have a review of our -- the impact of the -- on the bank. We think there will be a long-term impact. And after our review, until now, we think by reviewing those existing customers, we think the impact still be limited. But in the long run, the effect will be felt maybe in next year or the year after next year. So we're responding proactively, even though we have increased the support and also the risk mitigation and risk monitoring towards major high-risk companies, and we have some measures to access these customers. And also in terms of the on-boarding, we are adapting our credit policies to the changing market environment and we have adopting and revising our credit policy of 2019. And also about the industry, apart from the manufacturing, other industries that have, for example, retail -- wholesale and retail businesses, this has been long time a high-risk industry. We don't -- we haven't seen a major amelioration for this industry and also future of the market. And also, China-U.S. trade tensions, they will have an increasing impact on the labor-intensive industry. So this will have a negative impact on the retail businesses, for example, the mortgage businesses and also credit cards. So we will have stringent measures towards these factors, especially in the personal banking businesses.
Second question will be answered by the head from the IT department.
Thank you for your attention for upgrading of the systems. So starting from 2010, we have started the building of the -- some onshore and offshore integrated system rebuilding. So this will -- this is a -- this also ranked first place among the commercial banks in China to achieve the integrated business system covering both onshore and offshore businesses. And starting from this year, from the -- from May 31, we have a new smart IT upgrading system calling "New 531" project. The main intention is to maintain a leading position in terms of the IT technology capabilities to build a digitalized smart bank as such to increase our competitiveness of our bank. We have the layout for the "New 531" project. We will have a centralized and decentralized system and 2 support systems mainly relying on the Big Data and also the security of the data. We will have 5 areas that will see the major application covering BoCom's strategy as to better enhancing our ability in delivering cross-market and cross-border businesses. And the third is about the integrated online and off-line services as to offer smart and one-stop services to our customers. And we will also introduce the scenario service risk capabilities. And we will also establish a smart risk management system that's to better detect the risks in our operation. So in -- at present, we have 29 projects covering marketing, customer experience, investments. For smart operation, we have some biotechnologies, some biological recognition technology to be applied. So the boundaries, the physical boundaries can be broken down. So the financial services can be online 24 hours every day. And we have some intelligent customer services. For example, our customers can enjoy quality customer services through natural languages. And in terms of the smart risk management, we will be using Big Data, AI technology so as to better detect in the early stage those financial risks and to better resolve those financial risks. About the time line, we will be breaking down 2 stages. The first period will be starting from this year to 2020. And by the end of 2020, which will build the preliminary stage of the smart BoCom. And the second stage will be lasting from 2021 to 2023. And the smart application will be applied to the whole bank and also be expanding to the group, the whole group, including those subsidiaries. And the investment will be 10% of the operating revenue. I think this is a big investment.
Thank you for the question and also the answer. And also, we have been -- missed the one from BofA Securities. So I still -- I'd like to give this opportunity to [ Ms. Lang ] from BofA Securities. First question, they can bring in to us.
My question will be, first, watching closely about the regulators, the public fund can be invested into the securities-linked fund and the part of the asset management -- or the foreign subsidiary can be invested in the stock market. So what is your outlook on the stock market investment? And the second question is about the credit card businesses. At present, we have seen a booming development of the credit card businesses. And my question is about, what is your opinion about the cost and also the yield of the -- and also the asset quality outlook for the credit card businesses?
The first question will be answered by Mr. Tu, Hong and the second will be answered by the responsible person from the retail banking department.
The first question for the asset management subsidiary, the publicly risk fund can be invested in the stock market and also your opinion about the stock investments and your -- on the arrangements. The capital market investment, the off-balance sheet investment balance is RMB 700 billion. The stock market investment, including onshore and offshore, but we don't have a big balance. The stock market investments has been less than 3%, less than RMB 20 billion. At present, the customers' businesses of the wealth management are experiencing a transition and they are still experiencing a transition from the past periods when they think they can be guaranteed by the bank. But now we see the stock market has witnessed a major fluctuation. So this will pose a big challenge for the wealth management clients who still believe that there was still a guarantee from the bank. So we will choose those major clients who can -- who can accept high risk and high returns. On this basis, we will further increase our investment into the stock market but this is our intention. But this intention should be still combined with the willingness of the customers in taking the risks.
The second question about the credit card businesses. We have been celebrating the 14th anniversary of the issuance of the first credit card of our bank. We have seen a supplementation of credit card businesses. The total number has been exceeding -- the transaction volume has been exceeding RMB 2 trillion and the registered number has been exceeding 700 billion. And the writing has been in the second place. It has been maintaining our advantages in terms of the branding in some conventional area. For example, the product of the credit cards. We've been launching some new products, actually some joint NIM cards, have been watching closely and following closely, for example, the IP games, video games and also the World Cup. So this has been the hot topic in the society. And the super hot Friday promotion activity, this has been well received in the market. So we have been increasing our investment in these promotion activities, and we have also been innovating our credit card businesses by using FinTech in the credit card businesses. For example, PayIt app. The total registered number has been exceeding 50 million and the total payment volume has been exceeding RMB 356 billion. And we have reduced the time for approving those credit cards. And as for the asset quality for the credit cards at present, the NPL for the credit cards has been 1.43% and the -- that loan, meaning the overdue for more than 180 days, the ratio is 0.83%. So this has been a low position, low level compared to the international peers. As we have seen that, there has been mounting pressure for the credit card businesses actually in a volatile and complicated external market. We have seen upward trend for the NPL ratio for the credit card businesses. We have more stringent policies, for example, in issuing these credit cards, but we will focus on prime customers. And for the product, we will have a watch list. And also the -- in recovering, we will be using FinTech in monitoring those risks and credit card [ fast ] loan recovery as to detect and monitor the risks.
Thank you very much on -- for participating the announcement -- and today's announcement is completed. And on behalf of our 100,000 employees, we would like to pass our sincere gratitude to your support for Bank of Communications. And we hope that you could come to Hong Kong and we could communicate more. So that's all. Thank you.