Ping An Bank Co., Ltd. (000001) Earnings Call Transcript

Dear investors, analysts and friends from the media, good afternoon. Welcome to Ping An Bank's 2025 Annual Results Announcement. I'm Zhou Qiang, Board Secretary of the Bank. First of all, I would like to express my sincere gratitude to all of you for making a special trip to attend today's presentation. For those who are unable to join us in person, we have arranged teleconference and live streaming, including Ping An Pocket Bank and TrendJi Network with simultaneous interpretation available for overseas investors, so that you can all follow the latest developments of our bank. As we leave 2025 behind and step into 2026, we are witnessing profound changes in both the internal and external environment. China is embarking on a new journey. 2026 marks the opening year of the 15th five-year plan period with every sector channeling the energy of a fresh start to build strong momentum going forward. Continued macroeconomic policy support and the warming macro -- environment are providing the banking sector with a better environment of a steady progress. The banking industry is entering a new cycle for an extended period. Banks have been characterized as growth-cyclical high dividend yield investment. However, amid interplay and competition between technology and high dividend themes, the market is placing increasingly higher demand on banks, prompting every bank to reassess their own strategic positioning. So only those banks that can demonstrate their own alpha with distinctive characteristics and core capabilities will stand out. Ping An Bank too is entering a new phase over the past two years. We are among the first to initiate reform and transformation directing our efforts and build our internal capabilities to meet external challenges. Moving early, we expect to emerge early. This year is, therefore, a very important year in which our reform efforts are bearing real fruit. So our operating performance in 2026, we think our long-term value is well worth a wait. Now please allow me to introduce the senior management. They are Mr. Ji Guangheng, Secretary of the Party Committee and President; Mr. Xiang Youzhi, Vice President and Chief Financial Officer; Mr. Fang Weihao, Vice President; Mr. Wu Leiming, President, Assistant, Chief Risk Officer and Chief Compliance Officer; and Mr. Wang Jun, President, Assistant. Also in attendance are the heads of the bank's major business departments at the head office. I now invite Mr. Ji Guangheng, Secretary and President to deliver his opening remarks. Please, President, Ji.

Dear investors, analysts and friends from the media, good afternoon. Welcome to Ping An Bank's 2025 Annual Results announcement. It is a great pleasure to meet with you all once again. 2025 was a year of extraordinary significance. The 14th five-year plan was brought to a successful close. The 15th five-year plan was mapped out and Chinese modernization begins with firm and steady strides. At the same time, the external environment remained complex and challenging. Domestic development faced numerous headwinds. At a macro level, deep-seated structural imbalances in the domestic economy continued to surface with insufficient growth momentum in both consumption and investment, while risks in key sectors remained in need of ongoing prevention and resolution. In the face of these challenges, China's economy forged ahead with under pressure, demonstrating remarkable resilience. Overall, economic performance remained stable with positive progress as developments continue to advance toward higher quality and greater innovation, manifesting the economy's tremendous vitality. At industry level, the banking sector has entered a development environment characterized by low interest rates, compressed NIM and reduced yields with institutions broadly confronting challenges such as insufficient effective credit demand, mounting pressure on risk prevention and control and narrowing profitability margins. Nevertheless, buoyed by coordinated macroeconomic policy stimulus, the steady advance of new quality productive forces, continued expansion of domestic demand and an improving mix of economic growth drivers. The banking sector as a whole has maintained a sound and stable operations. In recent years, banks have also been proactively seizing opportunities and driving for reform and innovation so as to better adapt to the new landscape of economic development and strengthen their ability to navigate through economic cycles. Today, I will focus on three key areas: First, Ping An Bank's 2025 financial performance; second, progress on our strategic reform agenda; and third, our priority enhancement measures going forward. First of all, 2025, it was an exceptionally challenging year for Ping An Bank, yet it was also a year in which we laid a more solid foundation for our future. Impacted by low prevailing market interest rates, our continued commitment to passing benefits on to the real economy and our proactive business structure adjustment, our revenues and profits declined year-on-year for the full year. We achieved CNY 131 billion revenues, down by 10.4% and net profit, CNY 42 billion, down by 4.2%. However, as our strategic reform continues to deepen, a number of operating metrics are beginning to show improving trends as I will discuss shortly. In 2026, we'll devote our full efforts to achieve our operating objective of return to growth. 2025, we also have a number of bright spots in our operations. First, our asset structure was adjusted and optimized. Mid-yield retail credit products gradually ramped up in volume. Corporate general loans maintained strong growth and our support for the real economy was further strengthened. So loans grew 2.7% from the year -- from the prior year. Corporate loan balances grew 3.5% year-to-date and loans to technology enterprises and in the green finance sector achieved solid growth. Second, we continue to elevate our granular management capabilities. By proactively optimizing our funding costs, the general deposit cost was brought down to 1.65%, a decline of 42 bps, the largest reduction among major joint stock banks based on disclosed data. The full year NIM stood at 1.78%, which has essentially stabilized. Third, asset quality continued to improve and our risk buffer capacity remains sound. NPL ratio stood at 1.05%, down by 1 bp from the prior year. NPL formation ratio declined by 0.17 percentage points year-on-year with a particularly notable reduction in retail NPL formation. Provision coverage ratio stood at 221%, maintained within a healthy range. Fourth, capital management became more granular by adhering to a balanced approach of organic capital growth and external capital replenishment, we further consolidated our foundation for sustainable development. CET1 stood at 9.36%, maintained at a reasonable level. Detailed operating data will be presented by Vice President and CFO, Mr. Xiang Youzhi shortly. Secondly, I want to talk about the progress on strategic reform. In 2025, Ping An Bank upheld the principle of party building as the guiding force for business development and actively implemented the spirit of the 20th National Congress of the CPC and the subsequent plenary sessions as well as the Central Financial Work Conference and the Central Economic Work Conference. We remained committed to the political nature and people-centered orientation of financial work, made solid progress in the 5 major sectors. So at a bank-wide internal work conference at the beginning of this year, we put forward a view that bank must maintain strategic conviction. We cannot reinvent ourselves every year with new ideas, but must instead preserve steadfastly step by step, consolidating our foundations and throughout this process, we must regularly reflect on what we have done right and where we still need to improve. In terms of strategic execution over the past 2.5 years, Ping An Bank has accurately assessed the direction of the macro economy and made timely adjustment to our strategic approach. Building on our core strategy, we focus on financial performance and internal management, achieved a break and rebuilt transformation in our retail, enabled corporate and interbanking to actively fill the gap and continuously deepen the synergies between the head office and branches as well as between banking and insurance. In another regard, we proactively reduced high-risk assets, cleared legacy exposures and brought NPL formation to a peak. So on the liability side, we proactively optimize our funding structure. On the asset side, we encouraged high-quality credit deployments. Head office business enablement of branches was further strengthened throughout robust supporting areas such as pilot programs, resource incentives and approval policies so that local branches, they are more proactive in doing their business. At the same time, we firmly upheld the principle of strict bank governance, deeply embedded a culture of compliance rigorously practiced the philosophy of reducing cost, improving efficiency and elevating quality of volume and reinforce talent pipeline development accelerated technology and innovation-driven initiatives. Turning to specific business and management areas. First, the bottoming out of our retail is essentially complete with the first signs of dawn emerging. The most difficult period according to a patient who has just recovered and is still weak to bear intensive nourishment has passed. And we now have seen some strengths in our -- all kinds of retail business like credit cards and also like e-loans, orange business loans and maintained our commitment to high-quality AUM growth. Second part, our corporate business achieved a synergy with some optimization, providing strong support to the bank's overall profit performance. We deepened our strategy of being industry-specific, customer-oriented and product-driven, refined our industry risk and customer management mechanisms and fully leverage our core strengths in supply chain, finance, cash management and cross-border services, and accelerated breakthroughs in key subsectors. At the same time, our financial markets and interbanking business nimbly adjusted trading strategies, flexibly allocated and deployed funds across accounts, unlocked synergy benefits and enhanced comprehensive customer management and profitability. Third, asset quality management significantly strengthened and control remained effective. We advanced the restructuring of our risk management, enhanced the independence of risk management functions, essentially cleared the legacy high-risk assets. And so that we intensified NPL for collection and disposal, achieved a significant reduction in credit cost and continuously upgrade our bancassurance synergy. Fourth, we comprehensively strengthened granular management to improve quality and efficiency. We continuously optimize operating costs by supporting investment in strategic key business and elevated the cost benefit of wellness and reached ROI consciousness across head office and branches, optimized branch network layout and reinforced talent pipeline development. We placed the right talent in roles where they can best contribute and enhance their professional capabilities and overall management standards of our teams. We also further furnished our reputation as a technology-driven bank, enrich retail customer marketing tools, build a corporate digital product matrix, comprehensively upgrading investment advisory risk control and service capability and driving business transformation through technological innovation. Although 2025 was a really difficult year for Ping An Bank, a review of our operating performance in the second half and particularly in the fourth quarter reveals that effects of our reform are beginning to materialize across multiple dimensions. Retail loan balances stopped decline in the second half. Credit card balances gradually stabilized. Mortgage and auto finance balances registered positive growth from the prior year. Orange e-loan and Orange business loan balances broke through CNY 30 billion mark and retail asset quality improved markedly. Wealth management fee income with bancassurance as a key contributor continued its contribution. Corporate general loans grew 9.2%, approaching double-digit growth. And forfeiting volumes were reduced by more than CNY 130 billion throughout the year with asset structure continued to improve. Full year NIM was 1.78% and laying a solid foundation for our objective in 2026, that is return to growth. So based on key metric performance in the first two months of 2026, our major operating data already showing positive trends. Thirdly, we'd like to talk about the priority measures for next phase. In 2026, Ping An Bank will uphold the centralized and unified leadership of the Party Central Committee over financial work, deeply practice the philosophy of finance for people, fully implement all regulatory requirements, anchor our efforts for the objective of focus on operation, implementing strategy and return to growth. First of all, we're going to continue to uphold party building to add the guiding force and consolidate the foundation for development. We will leverage high-quality party building to drive high-quality development, centered on making solid progress on five major sectors. We will also enrich our product offering, differentiate the resource support, improve our capacity to serve financial needs in scientific and technological innovation, green low-carbon consumption as well as inclusive finance for SMEs. We will closely follow national strategy, refine our business structure transformation and upgrade, persistently resist unhealthy internal competition, fulfill our primary responsibility in protecting rights and interest of the financial consumer and work collectively to uphold a sound and orderly competitive environment in financial sector. Secondly, focus on operational management and deepen the implementation of the reform. We will remain unwavering in our strategy of strengthening retail, refining corporate that specialize in interbanking. In retail, we will deepen the development of our positioning as medium-yield credit bank, strong bancassurance wealth bank and low-cost digital bank. On asset side, we optimize our product to system and drive for volume growth and medium-yield product. On liability, we've reached high-quality product supply, continued to improve CASA ratio, reduced funding cost. We tap into potential of the consumer expansion and be a part of the Ping An Group's strategy of integrated finance plus healthcare and elderly care, leveraging the group's resources to deepen personal customer management. In corporate banking, we will deepen business reform implementation, accelerate the credit deployment to emerging industry, supporting sectors with strong transformation potential, advance effective execution and management of SMEs, focusing on industrial-specific scenario to develop specific customer plus specific product combination solution, consolidate our product strength throughout the process, leveraging Ping An Group's resources to build a distinctive yet integrated financial service, improve our comprehensive support. Well, regarding interbanking, we'll continue to consolidate our trading capacity, building an intelligent trading and risk management hub, improve transaction decision-making efficiency, diversify income source, deepen the development of the multi-asset investment capacity, strengthen our long-term investment and asset allocation capacities. Secondly, we will also seize the opportunity presented by the new technological development and upgrade to our technical-driven capacities. We will strengthen the application of artificial intelligence, increase resources investment, making substantial progress in high-quality digital finance development, focusing on key levels, including digital employee, precision marketing and precision risk control. We will also help to empower the operation management, minimize losses, improve efficiency and increase revenue. We will strengthen the development of the technical and data infrastructure, deepen master data management and the application of the external data and evolve from a human machine collaboration towards intelligent decision-making and automatic execution. Through the rapid deployment of a agentic AI platform, we can enable idea incubation and value conversion, supporting efficient operation across the bank. Thirdly, we will continue to deepen our operational and management work across all dimensions. Key priorities would include treasury management framework, refine our organizational and workforce development, consolidating risk management, advancing the capacity of the whole bank. We will improve corporate governance practice, reinforce our consumption protection and security safeguards, and continue to attach great importance to compliance management, persistently consolidate the development foundation for the entire bank. Thirdly, we will work at full force to improve the performance and drive and return to growth. As I mentioned, after 2.5 years of the strategic transformation, the most challenging period is already gone. Going forward, Ping An Bank will hold firm in its confidence, withstand the transitional plan and achieve continued value expansion and stable recovery in retail. We will pursue active customer expansion with stable pricing and revenue growth in corporate banking. We will further consolidate key areas for credit deployment, stabilize the deposit scale and continue to work towards return to growth, deliver a wonderful scorecard that satisfy the market, while at the same time, Ping An Bank has always upheld the shareholder interest. This year, we plan to maintain a reasonable dividend payout ratio and strive to achieve an improvement compared with last year, creating greater value to our investors. Thank you.

Thank you, President Ji. At the bank-wide work conference held by the beginning of this year, President Ji led us in reviewing and reflecting what has been done right and what is still need to be improved. And we need to continue to improve our work and continue to do the right work. The entire bank has improved its efforts to operating objective, focusing on operation, implement synergy and return to growth, working in full dedication to improve the steady recovery of the service and the financial performance. And you can see that starting from the beginning of this year and all the financial data has been improving, and we are actually making every growth with great strength and sustainable improvement. Ladies and gentlemen, and you can see that all the work has been really on the track, and we're going to report to you when time comes. Coming next, let's welcome Mr. Xiang Youzhi, VP and CFO of Ping An Bank to walk you through the 2025 annual report and present to you our full year operating results. Thank you.

Dear investors, all the analysts and friends from the media, good afternoon. Coming next, please allow me to report to you the 2025 operational performance of Ping An Bank. First of all, let's take a look at the overall performance. In 2025, the total scale of assets remained in steady growth. With structural optimization, the asset YTD was grown by 2.7%, where we optimized the liability and also making sure that the total assets increased by 2.7%. But at the same time, you can also see that the deposit grew by 1.4%, especially the current account increased by 0.6%. Secondly, the bank continued to work for the 5 major sectors to support the real economy and the rural revitalization. In 2025, technical finance, the inclusive finance, green finance and the pension finance, we made some very steady growth, especially while supporting the rural revitalization. Thirdly, with the ever-decreasing NIM as well as a proactive adjustment of the business structure, along with the liability industrial landscape, the full year revenue has been down by 10.4%. But even with such a pressure, we'll still be able to continue to advance efficiency gain and cost reduction. Operating expenses being down by 5.9% and our cost to revenue ratio still maintained at a good level. NPL ratio has been reducing. And at the same time, the total provisions being down by CNY 8.8 billion. So ultimately, the net profit was CNY 42.6 billion, down by CNY 4.2 billion -- down by 4.2%. Fourthly, as you can see that the NPL formation improved. In 2025, the NIM was 1.78%, down by 9 bps on Y-o-Y basis from the trend, the reduction was narrowing down. It's because we continue to optimize the liability structures, continue to work on the low-cost deposit. So overall speaking, the interest-bearing liability is being further improved by down 47 bps, reaching 1.67 percentage. We're taking a look at the NPL formation rate, it's been continually improved with asset quality remained stable. NPL ratio was 1.05% and NPL formation ratio was 1.63%, down by 0.17% still maintain a very healthy level. And the provision coverage ratio was 220.9%. We have the granular capital management with improved CAR, especially the core Tier 1 CAR was 9.36%, up by 0.24 pps. Tier 1 CAR and CAR are all been maintaining very good growth. Coming next, let me dive into the retail business. For the retail business in 2025, deposit has been maintaining a very healthy growth, where the mortgage also being stabilized. By the end of 2025, the retail loans being stabilized by reducing 2.3% compared with the beginning of this year. The reason is because you can see that the credit card loans being down by 6.8% and operating loans being down by 5.2% and mortgage are improving. So at the same time, we also continue to improve the high-quality loans and optimize the loan structures and the underlying asset structure has been further optimized further. Same as retail deposit remains stable. And you can see our interest rate is actually improving progressively track record. Well, regarding the retail business, AUM has been maintaining a growth. The wealth management fee income up by 50.8%. It is worth noticing. We have the bank insurance income grew by 53.3%. But at the same time, retail business continue to go for digitalization and integrated finance platform construction. For digital platform, for acquired customer extensively optimize operation and strengthen platform capacities, we are now making new strides. For integrated finance platform, no matter for the newly increased wealth customer, newly increased AUM or newly increased credit card customers are still making great contribution to improve overall performance. Let's also take a look at the corporate business. In 2025, we have optimized loan and significant improvement for deposit cost ratio with ever-improving structure, especially the loan has been growing by 9.2%. That's for the corporate loan, where we also optimized the loan structure and continue to reduce bills and other low interest product. The deposit finance is still continuing nice growth. But at the same time, you can see last year, -- and we have made a 46 bps optimization on the demand deposit cost rate, where for the whole corporate business, we still work on industry-specific, customer-specific and product-driven approach. Last year, our corporate customer number increased by 30.2% compared with beginning of the year. Other financial indicators are all maintained healthy growth. For interbanking, we still work on the investment transactions and the consumer business and continue to ramp up the business growth, especially on trading service and the sales and hedging, and both are showcasing very nice growth. The fourth one would be the asset quality. Last year, due to the impact from the property market, the corporate NPL ratio improved slightly. However, the corporate NPL ratio still remain at a low level. You can see that the corporate NPL ratio has been down. But at the same time, the banks then continued to do the write-off and the collection effort has been further stepped out. And you can see that for the full year, the nonperforming assets being covered, has reached CNY 36.8 billion, up by 10%, while at the same time, the write-off also reduced to CNY 48 billion, down by 23.8%. But for sure, we're going to keep an eye on the risk management of the property market as a whole. You can see that within the whole bank, the mortgage business or real estate-related business, the finance of the real estate loans decreased by CNY 35 billion. The NPL ratio has been up by a few bps. It's because that the selling cycle of the property market has been further extended and the capital started to see shortage, but overall risk is very controllable. But at the same time, for noncredit risk involving property-related business, the finance of the agency scale of the trust and funds was 31.8%, down by CNY 0.9 billion compared with the beginning of this year. That's all for the 2025 financials. Looking to the 2026, it's the first year of the 15th five-year plan. The economy, both home and abroad has been quite complex. We do have opportunities and the challenges at the same time. We're in face of a new challenge. We will take our strategic commitment, leveraging high-quality development as a key. Those are the seven points. We're going to continue to advance our business on the slide in order to further improve the quality. First of all, we'd like to work on the five key priorities in finance and continue to improve the efficiency of the financial service. Secondly, shift risk management forward and implement precise policies to support high-quality improvement, while firmly maintain the risk compliance baseline. Thirdly, optimizing asset liability management to empower business operations. Regarding retail business, we need to build on the customer-centric specialty retail bank, achieving goal with priorities benefiting and considering the scale. And then for corporate business, we will work on five key priorities in finance. Well, for interbanking, we need to continue to strengthen investment transactions and deepen interbanking cooperation and also deepen digital finance. That's all for me. Thank you.

Thank you, President Xiang. He has provided an in-depth analysis of the key metrics in the annual report, unpacked operating logic behind the numbers and proactively addressed a number of topics of market concern. We have seen many proactive changes over the past years, so we suggest you to focus on the trend. And all those topics Mr. Xiang mentioned, I think, laid a solid foundation for our discussion later. So later, we'll now move into the interactive Q&A session. I would like to invite our management team.

As of now, I think there are over 80,000 guests and investors have joined our presentation through in-person attendance and the various online channels. We sincerely appreciate your interest and support. Many of our guests have made a special trip to attend today's event, and we believe their questions are highly representative. So today's Q&A session will therefore focus primarily on interacting with guests present in the room. We will first invite analysts and followed by our friends from the media. In order to capture the full breadth of your views and suggestions, we kindly ask each guest to raise only one question per turn. Please stat your name and organization before asking your quesion. Okay, the first question, let's go to May from UBS.

Thank you, Mr. Zhou, to give me the first opportunity to ask the question. I'm May from UBS. And also Ping An Bank has always been the first listed bank to hold this annual results conference so that we can have a really good opportunity to talk with the management. So my first question will be more strategic and it goes to President Ji. In the past two years, I know that Ping An Bank have made great reform. So in your view, which phase do you think we have already entered into 70% or 90%. As of now, what's the main results you have seen? And the next phase, what are the key areas that you would like to focus more? So what's your outlook for 2026? That's my question.

Regarding your question, I think I have already addressed in my delivery speech. This is the third year for the new management team. After the past 2.5 years, indeed, I think this progress or process, there are very challenging external environment and the reform as of now, now we're entering the deep-water region. How much you asked me achieved? I think over 70% and it's an ongoing progress, and we need doubling our efforts. Of course, we hope that during this process, we can digest some legacy issues and form new momentum for the future. At the same time, guided by the government guideline and also based on our own business characteristics to form our own trend and momentum. In my speech, I touched upon that. In the first -- in January, the bank-wide conference, we spent two months as to review what we have achieved in the past 2.5 years, what we have done right and what we need to hold on and what need more efforts to be put up. So during this process, we are reviewing back and forth, and talk with all those new and former management team members. During this process, we have found some questions and the results, and added with the first two months' performance we have seen in this year -- within the year 2026, our goal, we said we need to return to growth. This is a really broad and strategic goal for Ping An Bank. With this opportunity, we'd like to give the market the confidence that we are back to the market in 2026. So this transformation since 2023, we are holding our aim and strengthening on the party guide business line that we are reducing high-risk assets. Of course, it was high-yield at that time, but we made our mind that we need to digest them and to optimize asset allocation and to adopt granular capital management [indiscernible]. We are cutting the cost and to govern the bank in a more strict manner and to strengthen our frank conversation or discussion with regulators and the market. Based on what we achieved in 2025, though revenues and profits are all negative growth. But for efficiency-related metrics, they are improving. And for deposit costs, well, we are among the very first banks to mention this metric. We were down by 42 bps year-on-year. and NIM, the decrease speed narrowed year-on-year. Among joint stock banks, I believe our NIM and deposit cost and also our provision coverage ratio, including NPL and NPL formation ratio, I think, are among quite a good range. So I said I think our performance is quite stabilized. And in other regard, asset structure stabilized as well. For the medium yield retail products, there gain volumes and corporate general loans grew by 9.2%. And also discounting and forfeiting volume over the past two years was down by CNY 113 billion and the risk performance greatly improved and formation ratio was down by 17 bps Y-o-Y. So I think all things are going towards a positive trend, and we have seen initial results for the retail transformation. We already see the emerging light, the dawn light for our transformation. That's why in 2026, we are quite confident that we can return to growth in 2026. So looking back, we have calculated several points, but I will not elaborate here. And the main strategic measures, I would like to mention is first party guided to govern the bank. In 2025, we have actively conveyed some party-related lessons and activities so that we can have really strong focus on ideological development. Every Monday in the afternoon, we will have a party member conference for the whole bank, but because we are holding the annual results announcement today, so yes, this week we will delay that. So we are talking about during this process, this transformation, how can we better employ the requirements from the party, from the government and to put all those ideas into our business performance and operation. And second, in consumer rights protection, this morning, we spent hours discussing how can we better protect customers and consumers' rights because through this process, we can better reflect our -- like awareness in protecting consumers right. Three years ago, we said we'll strictly manage the bank to strengthen party members' awareness in doing business in the right way. And second, we're strengthening our research and analysis of the macro environment and to discern the right direction for banking business. And third, with the impact of narrowed NIM, we are among the first to react. I remember several years we've discussed with the market. I think standing at this time point, I'm quite confident is that we are still in the right track. Though we have seen a great reduction in the retail high-yield assets. And also, we have put great focus in cultivating our own team and we strengthen corporate and retail synergy. All those have laid really good foundation and conditions for future growth. And the last one I want to talk about is that we strengthen our talk with the regulators, and we are keeping a frank conversation with the market so that we can adhere to the major 5 sectors to do better in the 5 article. The frequence and the levels we talk with the regulators and the results we see have been quite good. We've been talking with regulators and also at all levels in provincial or city level, so that they can be rest assured that they know what we are doing and they know well, which process we are, and we can understand better their requirement and their support to us. And also, we upgraded Investor Relations to strengthen our market profile. We always said we need to be candid and to be really frank with our investors with like annual results conference, presentations, investor visits and road shows. Sorry, I got a phone call, sorry. Our channels so that we can provide timely straightforward communication on our performance and build a stronger investor confidence and market credibility, especially during the difficult times, we need to be very frank with our investors about our fundamental performance, and they can know which process we are. And fifth I would like to touch upon is that we are deepening our transformation across all business lines. Mr. Zhang just delivered a really detailed report. I will not elaborate here. So sixth point I would like to touch upon is that we upheld strict governance and granular management throughout the organization. We place strong emphasis on building our compliance culture and institutional framework, tightening oversight of management staff at all levels. Internally, we aligned thinking and build bank-wide consistence around One Ping An Bank. And also, we answer or respond promptly to employee concerns. On cost, we applied rigorous management to funding cost, operating cost and risk cost. Head office, for instance, has continuously optimize the branch network. Over the past several years, we have seeing a really great changes that we have been really mindful in how to save every dollar, and we have sharpened our ROI mindset. So at all respects, we have seen great improvements. At the same time, talent pipeline development has been a continuous priority through structured rotations and calorie adjustments, a combination of internal promotion and external hiring and a significant ramp-up in graduate recruitment, all are aiming at building a management team that can sustain the bank's long-term growth. We're looking to the year of 2026, what we're going to do. In my prepared remarks, I have already shared with you. Overall speaking, for next step, what we need to do is to actually build our blueprint to the end. We stick on what we do right. But still, there are something we need to improve. For example, after the internal meeting, we believe the retail business has been further stabilized. However, the retail business need to go back to the healthy and efficient growth. I think it still takes time because overall speaking, the retail and the credit business was still undergone great pressure, as you can see from the consumption statistics, especially right after the spring festival to today, and you can see that probably we have the lowest negative growth for the individual loans, probably the lowest one among all the banks, but still the banks take time to repair and restore the business, same at the market. So that is what we have now. In the whole process for the past few years, we were working on the digesting the high-risk assets in retail business. And we also withdraw from some high-risk customers and continue to further reduce the retail loan size. And you can see that last year, according to the revenue, and it's been down by around 10%. But however, by the beginning of last year, we still have some high-yield and high-risk retail assets. Well, for those high-yield and high-risk assets, I believe the adjustment has already been made in place. But still in the retail business, we are under pressure for reform. This is something I have to present. And secondly, we still need to further strengthen our corporate business system building. We used to be pretty wake for the corporate business. For the past few years, the business has been revitalized with nice growth. However, you may notice many of the banks are emphasizing on corporate business for the past few years, especially in the industrial circle. So how can a bank would be able to maintain such a good momentum of the corporate business? It's a key. Especially, we really would like to make sure we have the customer-specific product without initiating the unhealthy competition, we still would like to maintain a good corporate business growth. But at the same time, the risk control over corporate business is also the key. When people have been keeping an eye on the property market, we should also notice how it may impact the corporate business as a whole. So still more adjustments be needed. And the third improvement we need to do is the overall risk control management. I believe now we have the top 6 branches accounted for 60% of our overall revenue. We do have 6 branches that are working with very good performance. And we still have some mid-range branches, whose potential still need to be further typed in, but that really takes time. So in key areas in key verticals, we really need to make sure those branches can continue to improve their performance to withstand the market needs. And that is also the so-called unbiased development issue we need to address. Well, fourthly, I believe technological investment is quite important. Ping An Bank and Ping An Group made sufficient investment into technological innovation. However, for the past few years, even if we made the technical investment, however, as AI and the big data is coming, we still need to maintain our leadership for technical development. Besides making investment, building talent pipeline is also the key. We need to make sure we have enough talent in the pipeline ready for the business to go forward. So I believe what has been presented to you are the key of the market. The reform has been done for a few years. And we were the reform for around 2.5 years. The basic reform has already achieved initial results. I think the most difficult time is already gone. The performance being stabilized, especially for the past 2 to 3 years, I think the performance being basically speaking, stabilized. For the past few years, the bottom building is already gone. The most challenging time is also gone. I do hope in the near future, starting from 2026, -- no matter top to down or bottom up, let's continue to retain with growth, working with the party building as our leadership, continue to make sure the financial work -- works for people and also providing financial support for the good start of the 50th 5-year plan. In this process, we should also continue to speed up the credit release and also improve the deposit size and well manage the risks. So -- in the whole process, we hope that the result from our reform could be stabilized and could be carried forward. Well, for sure, we also would like to hear more from our investors, from the friends from the media and analysts for your insights and for your suggestions and your support. Thank you very much for being patient with Ping An Bank for the past few years.

[Interpreted] Thank you. Thanks for President Ji. As you mentioned, for the past 2 years, we are doing something right. And the reform result is alive with our expectation. We are now seeing the dawn at the end of the tunnel. Well, for this year, we're going to continue to stabilize the business for further growth. Let's welcome another analyst.

[Interpreted] My name is Zhang [ Shuai ] coming from CICC. Thanks for President Ji and [ Mr. Zhou ]. I was talking about -- I heard the word return to growth, the keywords for several times. I was taking a look at your financial report, the revenue has been under pressure, but the leadership has already mentioned, you are going to re-embrace growth. After 2, 3 years reform, I was feeling quite happy of hearing return to growth. However, from the volume, from the price and from the noninterest income, how you're going to really return to growth? Any specific measures and target?

[Interpreted] Let me help to answer the questions. Well, for Ping An Bank, I have to see for the past 2 years and more, we'll be proactively in reorganizing ourselves. For the past 2 to 3 years, you can see the adjustment and the reform has already been well done, especially the high-risk assets and the high-risk retail business. So overall speaking, in 2026, the Air side of the retail business, we believe we'll be able to catch up with market cadence. The second point, for the past 2 years and more, liabilities and asset structure, we also made further adjustment, especially you can see our interest-bearing patent cost has been continue to go down from last year and also have a onetime adjustment for this year and which is benefiting NIM and revenue as a whole. But at the same time, for the past 2 years and for the corporate business, the Air is also continued to build great momentum. Last year, our corporate customer number was growing by 30.2%, which will also help to provide us a solid foundation for business growth. One more point. Last year, you can see within our revenue, a significant reduction is being impacted by the bond market. Last year as a full year, the bond market showed some volatilities and fluctuations. The absolute return from the bond is still good, outperforming the market. However, 2024 was a year a big year for bond market. So that's the reason in 2025, comparatively speaking, there was a negative growth. And we are summarizing the licenses and adjusting our strategy. Hope in 2026, even if there are some fluctuations and volatilities of the bond market, we hope that we can well study the market to flat out the volatilities and then to continue to boost the revenue as a whole. Well, let's also take a look at the risk. You can see for the NPL formation ratio, even if we do see some property investment from property investment impact to the retail business, but overall risk is still well controlled. And you can see the high-risk asset reduction are going to have delayed the blessings over the risk. And in 2026, you will see how the high-risk business reduction is going to benefit our risk as a whole. And to some extent, it's also going to boost the recovery of the profit. Well, regarding the cost, and you know that we were initiating the cost initiative for the past 2 years. In 2026, we're going to continue to do the same. May the cost reduction not as huge as what we saw for the past 2 years, but still going to continue with cost reduction and efficiency gain in order to support our business growth further. Thank you.

[Interpreted] Thank you. Starting from this year on, we do see some performance indicators being showing great growth. So we're still very confident for the overall business growth. Let's welcome another analyst. Madam Shen from Huatai Securities.

[Interpreted] My name is Shen Juan from Huatai Securities. I have a question regarding your corporate business. Just now, the management team has already mentioned Ping An Bank is firmly transforming and reforming its business. Your corporate business is also continued to be refined with some very good initiatives being proposed. I'd like to ask you for the Ping An Bank, as you can see, the international volatility has been pretty huge, while in China, we just have the 2 sessions. The corporate business, is there any priorities Ping An Bank may have? Especially last year, we find out your customer operations show a very nice growth. How are those going to be translated into the future performance indicators? And what will be the resources allocation and the target plan for the corporate business in the near future?

[Interpreted] Let me just help you answer the question.

[Interpreted] Thank you. Well, for the corporate business in 2025, and we still stick to what has been done for the past. We are there to see the retail business is undergone with industrial circle. Well, for corporate business, the corporate loans being grown by 3.5%. The general corporate loans increased by 9.2%. The low interest yield bills being down by [ CNY ] 130 billion. And we believe there are some nice growth, I mean, by this approach. Well, if we take a look at what has been done in 2025, for Ping An Bank, our corporate business strategy is still bit consistent following what has been mentioned before, that is continue to have one blueprint to the end. We're still going to be industrial-specific, client-specific and providing refined operation. And 2025 is also the first year for the corporate business to go through reform. So overall speaking, what we do is to stratify the customer for further refined operation. For example, clients being divided into mid, small and micro clients, providing customer-specific solutions and support. But at the same time, we also continue with the business growth and with a very nice growth. Generally speaking, there are some good progress we made. Let me just report to you. First of all, regarding the customer for Ping An Bank, we do have a strategic KA account department providing [ 293 ] enterprise service. And we also serve the family enterprises and industrial upstream and the downstream, even if we only have [ 239 ] group enterprises, but we also cover the upstream and downstream in the overall value chain. We provided a key account specific solution and making sure our operation would be a part of the customer strategy for those key accounts. And we should also have full expansions, including extending customer, extending product coverage and also extending the coder. And for those clients with good reputation, we hope that we will be able to support the assets, where for those customers and clients, we're sitting down with them to talk about strategy, international expansion, key projects and digital optimization and renovation. Those are all that the management team of the group be interested. [indiscernible] do the way, we will be able to make sure the account operation could be a part of the corporate strategy, identify the possible opportunities for Ping An Bank. Like Mr. Ji has already mentioned, we hope the customer operation and the product could be well aligned. Last year, we do have the dot plot, considering the customer need in different industrial circles and leveraging our existing strength product to take care of the customer needs. By so doing, we hope we will be able to have a precision support to the customer. So generally speaking, compared with other large banks, Ping An Bank is still not having the price and the scale advantage. However, we do take care of the specific solution scenario by providing the precession solution. Secondly, we really want to be industrial specific. In 2025, we made a solid progress in exploring into new verticals and industries.

[Interpreted] Just like medium report last year, we said that our cooperation with business and the risk to put risk control at the first place and to categorize industries into major classes and then we find different supply chain and we discern our opportunities along the supply chain. For example, semiconductor, which is really at the height of the market, everyone is paying great attention on that. So we are looking for like several opportunities, where we can get easily and at a first stage. We are looking for industries that we have first starter initiative and to scale up gradually to go for quick iteration and to have our own policies in clients, channels and policies so that we can match with our clients. For the progress we made in last year, we have 6 lines in the corporate sector, no matter look at volume or price or risk control and the clients' quality and revenues. In my perspective, I think they have demonstrated better performance than other corporate channels. So this encouraged us a lot. And also for the first 2 months in 2026, I think we have chosen the right path. And third, I would like to talk about Ping An Bank. We need to play out our own advantages. In several sectors, we have our own characteristics. I mentioned about the supply chain finance. For example, discounted bills and invoices, et cetera, we will cooperate with our distributors and vendors and also to make our business more granular and that our tools can be more adaptable for customers' real business scenarios. So that we can rely on their trust on our accounts and transactions, et cetera, so that we can find our value during this business. And the car ecosystem is another scenario that we have built our advantage. And the third direction is that for iron steel and their vendors and distributors, so they contributed quite a lot to our asset growth and the deposit accumulation. And another scenario I would like to mention is cross-border finance. We rely on Ping An Bank headquarter with branches we synergized together to run this platform and to make our 5 great accounts recognizable by our clients to provide one-stop solution for them. For disclosed number, we can see that for transaction bank, the total volume was almost CNY 2 trillion, grew by 2.3% year-on-year and cross-border finance volume total was CNY 330 billion and grew by 30% year-on-year. Those all demonstrated our results made in those specific business. We are also building our new products. Last year, they have made improvements as well. For example, our digital treasury platform, we have group level clients altogether 4,400. So it's a great improvement and growth. That's why in the future, we will hold on to our strategy and keep looking for the opportunities that we can better play out our advantages and gain or provide more value to our clients. Last year, our corporate client number, I would like to add, grew by 13%. All in all, I think our corporate foundation comparatively was quite weak. So we are trying really hard to be careful, of course, to accumulate our clients and to learn from the best players in the market. So we want to be really selective and to hold on to our business strategy and be perseverance in doing corporate.

[Interpreted] Thank you, Mr. Fang. Corporate has really made up the gap during retail transformation. Just like Mr. Fang said, we are doing selective corporate in customer products and business sector, and they have laid a really good foundation for the whole bank's growth. So next round, I would like to ask Goldman Sachs.

[Interpreted] I'm Yang Shuo from Goldman Sachs. You mentioned a really good phrase that you enter first and you exit first. Well, we understand that during retail transformation, you have reduced a lot retail high-risk assets. So we want to understand going forward, what's your asset quality outlook? And also, especially for retail, for consumer loans and car loans, do you have more detailed elaboration on that? And also, when we talk about risk, we also talk about buffers. So do you have enough buffers for future latent risks?

[Interpreted] Thank you. Thank you for the question. Well, first, addressing asset quality. The whole picture, like Mr. Zhou mentioned, I would say 2025 was a year of stable risk performance. This is in line to our expectation. From disclosed metrics, NPL was down by 1 bp compared to our peers, it was quite a good stable and formation kept decreasing. Provision coverage ratio decreased compared to last year, but still among the industry average. Let me break by retail and corporate. Retail for fifth consecutive quarters, NPL formation have been going down and also volume going down. So that is to say we have basically digested retail NPL legacy. 2026, it will be a year that we continue to see this momentum. But I would say the new assets in retail perspective is quite good. But of course, we have to balance between business growth and also risk control. You also mentioned about the mix in retail. Well, on one side, I mentioned for the existing part already digested. But for the new part for mortgage, for example, you are all concerned with. I would say for the collateralized [ title ] loans, we almost digested, but it's still ongoing. And for mortgages, we mostly was issued during 2021 and 2023. And overall speaking, I think our mortgage was under quite good risk picture and NPL ratio has been maintained at a stable level. And we mostly concentrated on the first and second-tier cities, and we take differentiated risk control measures. Of course, we feel the pressure on the mortgage side. But what I'm saying is that the pressure is getting lesser and new mortgage we issued are going toward a better direction in asset quality perspective. Another part for corporate you may notice in the annual report, historically speaking, I think corporate NPL ratio was really have been really low like a range. And first quarter 2025 until second and third and fourth quarter, if you look at formation ratio, I think, was under like a stable evolvement. So in 2026, I would say the trend will be much better for corporate NPL ratio. All in all, asset quality for Ping An Bank, I would say we already see the height of risk digestion and -- for the new issuance, quality has been a really good performance. So the asset structure has been optimizing. That's why we project that in 2026, we will maintain a stable risk performance. Provision coverage ratio will maintain at a reasonable level. Thank you.

[Interpreted] Thank you, Mr. Wu. Just like he said, we are seeing a good turning point for retail digestion and good momentum for risk performance and stable asset structure will be a solid foundation for future growth. Okay. Next question. The lady over there.

[Interpreted] I'm [indiscernible] from Huatai [indiscernible] Securities. Well, Mr. Ji mentioned a lot of measures we have adopted during retail transformation. But the market concerns very much about retail. So in this regard, you mentioned turning point. Can we say we already reached a turning point? And in 2026, can we see some recovery in business performance? And what's your outlook for wealth management business?

[Interpreted] First of all, thank you all for the support for Ping An Bank, especially for retail business. Regarding your question, I will try to answer from several perspectives. First, results and second outlook. For the past 2.5 years, we have adopted proactive transformation in retail business, optimized risk policies and restructured our growth momentum. After this round of adjustment, I would say, retail business already passed its most difficult times. Just like Mr. Ji said, the most difficult time has been behind us. Several key metrics have seen improvement, noticeable improvements. That's why we can say the turning point already shown, and we are in the right track to recovery to growth. 4 perspectives, I would like to elaborate. First, asset quality greatly improved. We adopted differentiated real-time and risk policies and customer management. In 2025, NPL ratio for retail was down by 1.16%. And second, total retail balance stopped decline. At the year-end, though it was down by 2.3%, but compared with the end of 2024, it was narrowed by 8%. And Q-o-Q speaking, in the first half of 2025, our retail was down by [ CNY 4 million ]. And the second half, it rebounded to positive growth. So starting from third quarter, I would say, it basically stopped the decline. And we almost digested all the high-risk retail loans. And for credit card, since the second half, it has rebounded to positive growth, though a little, but still it's a positive growth. And for credit card for the circulated assets, I think they are rebounding to a positive growth and laying a solid foundation. But at the same time, for auto finance loans as well as the individual mortgage loans has already maintained a positive growth for the full year. Grow by 3.7% and 8.9%, respectively. But at the same time, we have the Orange e-loans and Orange credit loans also making new value contribution. The balance is already more than CNY 30 billion. So to some extent, the loan has already stopped reducing. And thirdly, that is the structure of the operating and management business as well. The most important one is the deposit business. We leverage the diversified use case to improve the high-quality deposit improvement, especially the daily average current deposit is being increased by 2.3%. As we grow the deposit, the interest paying rate has been down by 36 bps with great efficiency gain. For the wealth management, we continue to optimize the structure. So we not only seek for the high-quality deposit, where for bank insurance, for corporate loans, they are all maintained good growth. So overall speaking, our wealth management fee increased by 50.8% and at the same time, the agency insurance fee increased by 53.3%. And fourthly, the improvement of operational efficiency has been greatly demonstrated in 2025, retail business revenue down by 30.5%. Compared with 2024, it's been narrowed down by 12.4%. The slope of the decrease has been smoother and slower, while at the same time, as we continue to optimize the customer base and improve the corporate empowerment loss with declined trends. The net profit of retail business started to see the nice recovery and continue to improve the efficiency of our credit business and become an important contribution to our overall profit. So actually, the inflection point of our -- inflection point of our retail business has already started to show up. As you are asking how we're going to move forward with retail business. In 2026, as we continue to allow the loan business to return to growth, along with the high-quality development of the pan wealth management, we believe the retail business revenue and profit will continue to increase and improve. As we improve the efficiency, we will also strengthen and optimizing the customer base and the business structure. But retail business need long-term operation. So that's the reason a few things we need to be keep in mind. First one is long term and short term. By emphasizing on the long-term operation and the short-term return, we still need to maintain a substantial business growth and in sustainable approach. Secondly, we need to strike a balance between efficiency and the scale. Thirdly, we will also strengthen the business and risk coordinated development and making sure we build the synergy for value and efficiency creation. And fourthly, that will be the online and offline channel integration, while leveraging online channel to further expand the service coverage, leveraging the offline channel to build a close relationship with the customer, providing a seamless customer experience. All that need us to work on the system, the details and work on the standards, making investment and keeping a down-to-earth attitude to maintain healthy growth of the retail business. Regarding what we need to do in 2026, I have 3 points. First of all, customer operation for Ping An Group, we have 250 million customers, including customers from insurance, bank, securities and medical surgeries. And we also formed a well-established financial ecosystem. We understand we have diversified and unique needs from each customer. Ping An Bank would be happy to be a part of this ecosystem. By providing precision customer stratification and differentiated product and interest, we can support our customer with the wealth management and health solution providing. We're also going to continue to optimize our profit bank app, making sure the online operation of the customer and offline customer communication would made us as a companionship. We are worry-free and money saving and we should also make it into reality in customer service. Regarding the business development, for the loan book structure, we will also do further optimization. Besides working on our cornerstone business, we will also continue to release the midrange yield asset business with new capacity and efficiency gain possible to improve the customer loans and improve the wealth management, leveraging [ AIM ] to making sure we have a good product allocation to the customers and continue to seek for continued and sustainable development of the wealth -- all those developments are in need of the great team. And we're also going to continue to strengthen our team building. We really would like to make a customer-centric account manager team growth pathways, continue to improve the team in customer acquisition, customer operations and customer support, really make our team who understand the wealth management, customer needs and financing. In the first 2 months of this year, along with the indicator improvement from 2025, we already started to see a trend of retail business going back for growth. Even the growth might be moderate, but the trend has already started to show up. We're still going to be customer demand centric, creating value to the customer and also drive the high-quality growth of the retail business. Thank you.

Thank you. Thanks for Mr. Wang. Thanks for giving us the updates regarding the retail business. It's key for our transformation and strategic development. Let's welcome one more analyst, please. Let's welcome.

I'm a banking analyst from CITIC Securities. My name is Xiao Feifei. Just now as the management has already mentioned, the asset quality has been good. Many investors are worried about the asset quality of the property market. Are there any trend for the entire property market, especially the loan quality? What would be your outlook, especially for those key accounts? What the risk trend might be?

Thanks for your question. Let me help to respond to the question regarding property market. In my first answer, I have already mentioned the overall asset quality has everything to do with property market. Let me just dive deep to respond to your question. Let's first talk about the corporate business. In 2025, property market has still undergone profound adjustment. Many of the enterprises and the developers are on the capital chain, especially the private companies, some of them are seeing increasing risks. We are also somewhat impacted. NPL ratio of the property is being elevated compared with 2024, but still our data is lower than the industrial average. As I have already mentioned, in 2025, in Q1, we do see some concentrated risk or exposure made by the property developers. Starting from Q2, we will control the nonperforming loans and our loan production also started to show good results. I can firmly tell you the peak time for risk generation for property market is already gone in Q2, Q3 and Q4. And at that time, the NPL ratio is 2.2 to 2.5 percentage. The exposure has been further stabilized. And we also see some reverse trend in this year. Well, as you were talking about the key account in property markets, what did we do for them? I think majority of the risks for the property market are the loans being released before 2021. For key real estate companies, we have the one company, one specific solution. We are actually taking care of the project launch, evaluation of the capitals, and the risk management. So for key account risks right after 2025, majority of those risks being well managed, exposure is quite limited. As far as I know for the existing key account, the risk is still controllable, assessing their market performance. Well, the property market, we have collaterals and we also stick to the collateral-based solution for property market. So the asset quality of the property market is truly resilient. And we also continue to step up on the collection efforts. I can confirm with you in 2026, we have improved the asset quality in the property market. However, you can see the national policy indicate the property market need to be stabilized. We're going to follow the national policy for making according adjustment. For retail business, mortgage is improving and the collateral has been further improved. Incremental mortgage growth is still looking right. And for many risk performance and anti-fraud risks, we can see the new loans issued, the underlying asset quality is pretty good. So overall speaking, the risk is manageable. In 2026, for sure, I have to admit there are some pressure for property market, but the risk is controllable. Thank you. As has been mentioned, for property market is being quite prudent, we'll manage the loan size and the risks and also making enough provision. I also see some positive signals from the property market. We have every confidence to well manage the risks. Let's welcome one more analyst.