China Construction Bank Corporation (CICHY) Q4 2021 Results - Earnings Call Transcript (2022)

China Construction Bank Corporation (OTCPK:CICHY) Q4 2021 Results Conference Call March 30, 2022 4:00 AM ET

Company Participants

Changmiao Hu - Secretary of the Board

Guoli Tian - Chairman

Zhihong Ji - Vice President

Zhang Min - Vice President

Yuanguo Cheng - CRO

Conference Call Participants

Ran Xu - Morgan Stanley

Zhang Shuaishuai - CICC

Changmiao Hu

Dear investors and analysts and friends from the media community. Ladies and gentlemen, good afternoon. A big welcome to the 2021 annual results announcement of CCB, and also a big thank you to all of you for your care and support for CCB. Because of the COVID control and prevention needs, this announcement will take the form of conference call and live streaming.

So present at this venue are Mr. Tian Guoli, Chairman of CCB; and also Ji Zhihong, Vice President of CCB; and Mr. Wang Hao; Ms. Zhang Min; Mr. Li Yun; and also Mr. Cheng Yuanguo, CRO of CCB. And also, Mr. [Leung Xingxong Anthony] is also joining us online And we also have some representatives of the directors and supervisors at the venue and also heads of other departments. My name is Hu Changmiao, Secretary of the Board.

So the announcement of CCB in 2021 was made last night. And also, the papers were already released on the official website of CCB for your information. So in the interest of time, we will not present the details on this occasion. So now we would like to invite Chairman Tian Guoli for the speech.

Guoli Tian

Dear investors, analysts, media friends, good afternoon. On behalf of all the staff of CCB, I'd like to welcome all of you to this announcement. I'd also like to take this to express our appreciation for your long-term support for CCB.

In 2021, in face of the complicated situation home and abroad and also the different challenges and risks, CCB has been earnestly implementing the deployments of the state -- CPC Central Committee and the State Council in promoting the new cost of development and also finance action, and we guided the financial resources to flow into the key areas and weak links in the economy. And of course, we contributed to the construction of the new development model and, of course, the new high-quality development. So actually, we have the balanced growth in asset and liability.

So the net profit for 2021 increased by 11.09%. We had an average growth rate of 6.25% for 2 years. And the NPL ratio is down by 0.14%, and we plan for CNY 91 billion of dividend payments. So we had a very good beginning for the 14th Five-Year Plan. So we actually handed out a pretty an excellent report card to the shareholders and the society. So I think all of the indicators are already in these papers, so I will not go into details on this occasion.

The New Finance accelerations by CCB is not only reflected in those state agent -- indicators. We actually share in the creation of solutions to the national problems and also the social issues. Of course, we also have won a lot of trust and support along the way. The CCB community actually enables the citizens to enjoy the services that we can provide everywhere. And this inclusive lending that is digitalized and targeted actually has grown from the thin-profit business to a major driver of business, and over CNY 270 billion of Yu Nong Tong has contributed to the rural revitalization drive.

More importantly, the New Finance accelerations can help us jump out of the box to seek answers. Now the path has really become wider and wider. And so we have more momentum for sustainable development. And the second development curve is becoming more robust, and we have won a lot of recognition from the international community, so -- which -- then we got more confidence as a result.

Now the COVID pandemic and the changes and also the geopolitics, of course we have uncertainty surrounding the market. However, we can still expect a pretty long-term rosy prospect for Chinese economy. In recent days, the State Council Financial Stability and Development Committee held a special meeting and called on financial institutions to look at the big picture and support the development of real economy. And of course, we will continue to be people centric, and we will continue to integrate resources along the path of New Finance.

And of course, we will reward you with better results and better performance so that we can jointly safeguard the stable development of the capital market. Of course, we are also looking forward to all of you lending us your support and increasing your holding of shares. Thank you.

Question-and-Answer Session

A - Changmiao Hu

So now let's get on to the Q&A session. [Operator Instructions] So now the floor is open for questions. [Operator Instructions] The first question comes from Louie Hao from Financial Times. Sir.

Unidentified Analyst

First, a big congratulation on CCB on your good results. We could see the net profit actually hit a record way. Also heard, Chairman, you actually talk about the New Finance action, and we heard about it on multiple locations. Also to ask you, can you give us more details? What are the differences between the New Finance action and the traditional finance? And what roles does it have for the performance of CCB?

Guoli Tian

Thank you for your attention to New Finance. Actually, New Finance action is a new thinking about finance under new development philosophy. The traditional finance has been developing for several centuries, and it has actually played very important roles in promoting human society. And of course, we actually have seen great changes as a result.

And there is one basic issue. Now in this digital and information era, people's demand for physical stuff and also for spiritual stuff is increasing. So we need a new language, new logic to talk about New Finance. In particular, after the financial crisis, we actually should think more about how we can serve the society better rather than become a social issue.

Let me give you an example. In the past, in order to gain efficiency to serve, about what -- if you invest 20% of the companies, you can expect 80% of benefits or profit. This is a very very sharp calculus. However, in this new development era with the people-centric philosophy, if we are over-pursuing the value, then you might forget the 80% of the customers and they will be left unattended. They will be marginalized.

So this New Finance action all boils down to the attention to people. But of course, we also should be supported by tools. If you want to serve that 80%, the majority of the people, it's not -- it cannot only be done by your wishes. You just -- we're not able to do that. But now with fintech going on, we are better empowered to do that. On the one hand, we have very lofty aspirations, and we are more able to serve the society.

I can give you one more example. Just recently, we were developing the Yu Nong Tong, which actually serves the villages. So that is the connection of the villages. In every village, CCB built about 520,000 outlets that cover basically all villages -- or, I should say, 80% of villages in this country because some natural villages are extremely small in terms of the population. But we can cover 80% of the villages in China through that Yu Nong Tong project.

In the urban areas, you might not need to go to a CCB outlet to handle your business. But actually, there is no boundary in this sales. And the country side should also have access to modern financial services. A marginalized farmer can enjoy the same level of service that can be enjoyed in the city. And this itself plays a very important role in financial equality.

It's very simple. We can take advantage at the community level, health clinics and also the CPC grassroots outlets. We can put some machines there and then people can get their service.

We cannot do it all by a mobile phone because people might not be that Internet capable or mobile phone capable. So basically, if we can use this as a tool, then we can pretty much deliver all of the services that are delivered in the busiest urban areas. So for example, withdrawals and deposits and also some wire transfer and also fast loan, et cetera, all of these can be enabled. In addition, we can also help a village-level government in terms of the e-governance and also employment service, et cetera. So it's just a one-stop platform, service platform.

Another example is inclusive finance. In the past, in the old days, people are -- we're trying to compete for the big accounts. And we used to have this too big or do big strategy. But now with the transition from the high-speed development to high-quality development of this country, now we -- when it comes to high quality, we should not only look at the big ones, we should also pay attention equally to the small ones or the midsized ones to improve the whole quality across the society. So inclusive finance is very important.

And several years ago, we made this strategy. So when you lend to the mid- and small or micro -- medium businesses without the help of fintech, you just cannot do that. It's impossible. However, the return is different. If -- you can just add one 0 to lend to a big account. But of course, you need to make a lot of investments to lend to the micro and small businesses. But with the big data and fintech, we can be better able to lend to the micro and small businesses.

In the past, we can lend to about CNY 20 billion to CNY 30 billion in the old days to the small businesses with an NPL ratio of 7% to 8%. But now with the Internet technology, with the latest IT and also with the AI technology or big data or blockchain, you name it, basically with all of these tools, we are better able to do such things.

In 2018, in the very first year, we lent CNY 230 billion with an NPL ratio of 1% and CNY 350 billion in 2019. And the NPL ratio is still at around 1% in 2020. And then we had CNY 450 billion of loans and the NPL ratio still was kept within 1%. So basically, it took us less than 5 years for CCB to develop the inclusive finance lending to grow it to over CNY 2 trillion.

Let me give you some data points for your comparison. We all know that CCB is closely linked to the real estate industry and our lending to real estate. And we actually granted a lot of mortgage loans. And we -- it took us about 30 years to have a lending about CNY 5 trillion in real estate, but it took us just 3 to 4 years to grow inclusive finance lending to CNY 5 trillion.

So maybe it's very hard to think that CCB handles inclusive finance because inclusive finance has been tried by a lot of people. It's not that people do not want to serve micro and small businesses. But that means very high NPL ratio, and the banks do not have that capacity to weak standard. But we have new strategies for New Finance. And with that support, CCB has only used 3 to 4 years grow our scale to CNY 2 trillion.

And also for our NPL is over our expectations. Our -- CBIRC had a tolerance of 3%. But for us, it was only around 1%. So I can say it is pretty effective and which really provided us with a lot of confidence.

In the future, we will try better and try harder to realize our ambition of providing services to the overall country and to the majority of the people so that we can have a more expansive scope of services and we can better help the small, micro and midsized businesses so that we can leverage more capability of New Finance and fintech to do better, to do more, and more people can enjoy those financial services and resources in an equal and fair manner.

Moreover, for CCB, we are also pushing forward our house leasing strategy. In the past, this is about something by traditional banks. Traditional banks only offered loans. But when we are trying to contribute to a mature or developed market of house leasing, it is very difficult to do. And we also call that New Finance.

So we have a whole set of ideology of serving the society. And under the umbrella, we have reconstructed some of our logic for New Finance and constructed some new product. So we have a lot of innovative product for that and with great result and great benefits to both the economy and the society.

Changmiao Hu

Thank you, Chairman.

Operator

Next question, Xu Ran from Morgan Stanley. Please.

Ran Xu

I'm Xu Ran from Morgan Stanley. I have a question regarding the structure as well as loan issuing.

So in 2021, the overall growth for loans is very good. Specifically for corporate loans is growing very rapidly. So we were wondering, what are the reasons behind that? Moreover, we can see that it is proposed by the regulatory department that the social financing growth speed should be in line with the nominal economic growth. And actually, this year, our overall economic growth goal is adjusted downward compared to last year. So would our goals adjust accordingly? And what are some changes that we might see in the issuance of loans in key areas, Mr. Ji?

Zhihong Ji

Thank you so much for your question. And thank you for following us. As a major bank, CCB has been promoting the roles for services and finances, and we try to achieve 6 guarantees, 6 stabilities. And more of the financial resources will be contributed to the key areas and to the weak links, and we try to achieve a sustainable and continuous growth at the same time.

So in 2021, we had a very good growth compared to the end of the last year. We have an increase of CNY 2 trillion with an increase of 12%. And for domestic corporate loans, we had an increase CNY 1.2 trillion, up by 14.8%.

And we've contributed more and stepped up for infrastructures. And on that basis, we've supported more for green inclusive manufacturing as well as rural rejuvenation. So we issued more loans in those regard to better fulfill the need of the real economy financing. One is that we've provided services to the major program of the country and to leverage our traditional advantages with an increase of RMB 733.1 billion, up by 16.9%.

And the second is that we are trying to be more green and trying to increase the quality of that greeness so that we can establish a long-term developed mechanism, explore new product, new services and new measures for green finance. And we issued more loans in terms of clean energy, energy conservation as well as carbon reduction. We have an increase of green loans, RMB 515.5 billion, up by 35.6%.

And the third is that our inclusive finance continued to lead the market, and we continue to diversify our system for inclusive finance. And for CBIRC, the inclusive finance balance is around RMB 1.9 trillion, up by RMB 449.9 billion. So we are leading the industry in that regard. And number four is that we continue to support the high-quality [department] for the manufacturing industry. We have an increase of CNY 152 billion, up by 29.2%. And we are trying to build an assessment system for the innovation capabilities of the tech industries. And our strategic increase for -- emerging industries has an increase of CNY 306 billion, up by 49.8%.

And number five, we are trying to consolidate our result of poverty alleviation and build our service brand for rural rejuvenation, and we're continuing to innovate our models of product and services. We have a new increase of RMB 377 billion for rural loans, up by 18.1%. At the same time, we are also promoting this mega retail ideology. We have RMB 7.9 trillion individual loans balance, up by RMB 658.1 billion, up by 9.1%. And we're still continuing -- retaining our first and top 1 status.

As of now, our economy is still facing many challenges and pressure, including the downward of expectations and its impact to supplies as well as the drop of demand. And we need to be more proactive. We need to take initiatives and keep everything stable.

So in the next step, we will push everything forward while remaining in that stability, continue to consolidate the micro policy, support the real economy and to continue with an appropriate increase of new issued loans and, at the same time, following the macro policy orientation as well as the demand of the customers to appropriately control the pace of the increase of loan increases.

And with regard to our key areas, the first is that we focus on the key areas and the weak links of the real economy. We continue to provide financial support to inclusive finance, technology, innovation, manufacturing, green development and rural rehabilitation. And we try to have this increase while remaining stability.

And the second is that we continue to provide good services for the major projects of our country and to increase -- or to focus on our issuance of loans for key areas as well as for infrastructures. And number three is that we keep a stable issuance real estate loans so that more of the appropriate needs of the property purchasers will be fulfilled.

And number four is that we continue to increase our internal demand to build up our ecology scenarios and to develop consumer finances. And at the same time, we have this good cycling of regional economy, including Beijing-Tianjin-Hebei region, Yangtze River Delta as the Greater Bay Area as well as Chengdu and Chongqing areas. And we, at the same time, focus on the support of Midwest as the Northeast.

So CCB as a major bank are also trying to leverage our good capabilities of both the parent banks and the subsidiaries to have this overall increase as well as for different debts and to increase our scale of asset management. So this direct financing channel in the recent years is very good.

And in the next step, we can continue to guide the social financing and social funding into supporting the real economy, and they can play a greater role in the future. That's it. Thank you so much.

Operator

Next question, from Mr. Zhang Shuaishuai, CICC.

Zhang Shuaishuai

I'm from CICC. So previously, we can see that the Chairman was attending the press release conference of the Information Office of the State Council. CCB is doing a lot of tryouts and trials for intelligent governance. And in the early of 2021, we attended the open day of intelligence governance (sic) [intelligent governance] hosted in Kunming of Yunnan Province. Now We know that there are a lot of services provided by CCB.

And also online, we can see there's a lot of good implementations of New Finance. And there are a lot of good cases. So thank you goes out to the management. And thank you to the information releases so that we can understand better the competitiveness of CCB in this area.

So I was wondering whether the management can introduce more regarding the intelligent governance. And what are our ideas behind that from the perspective of the group? And what are some impact it could have for our performances?

Guoli Tian

Thank you so much. So actually, for this intelligent or smart governance, this is also part of New Finance. For New Finance, we have a new development ideology. And the core is innovation to be green, to be more inclusive, to be more open. So those are our principles.

So if you follow that logic, a lot of the answers will become very obvious. So including our financial products, in -- or designing of scenarios, allocation of resources. So you can have the answers for all that.

For example, CCB has a great team of technology. But in the past, traditionally, we leveraged that to compete with our peers. We try to innovate to issue more new products. But it is not necessarily will boost our competitiveness because you're not having a wider or more comprehensive perspective. If you don't focus too much, you'll be obsessed with that.

If you focus on serving the society, we'll win the trust of the society. We'll have a very good reputation. After that, you will have greater potential. You have more room and space in the market. So that is our underlying logic.

And for our digitalization and our technology, we have such great ideology so that we can empower the society. Very early on when we were in the Yunnan Province and we were working with the executives or the management of that province, they were thinking, oh, you're so innovative. Oh, you can do this. And we proved that, yes, this is something we're capable of. Because, to be honest, for intelligent or smart governance in terms of technology, it's not that difficult or tough because for our banks, we deal with the numbers for a long term, and we have a very good capability to deal with those numbers.

So we can design different platforms or different products for smart governance. So for our perspective, for the benefit -- for the public, it could be a lot better. So based on that, we were working with Yunnan Province, and we've established a strategic cooperation agreement. And everyone was having this attitude of to try this out, but, yes indeed, within a very short period, we have this one-phone connection for dealing with different affairs.

And in Shanxi Province, it is the same. So a lot of the local government believes that, oh, this is a pathway that we can pursue. And when we try to build those areas up, we weren't focusing on profit. We weren't focusing on the revenue with our partners, including with the tech companies. We had a very good relationship of collaboration.

So this is to modernize the governance capability of the local government. And this is our responsibility as a major bank. This is our obligation.

In the past, last year, we have more than CNY 300 billion of profit. So with that profitability, you should be paying back to society. So we weren't focusing on the profit when we try to help with the intelligent or the smart governance. And we had a very good result, exceeding our expectations. Now we have already signed the agreement with 29 province and cities.

We reported a Jing-Jin-Ji and also the [Internet-plus governance-plus] supervision scenario development. So now we provided governance service inquiry and also reservation for over 200 million users. And we actually are connected to over 25,000 governments. We actually assisted in the processing over 3 million government affairs and over 7 -- the implementation of over 7 million lists. So basically, we increased their efficiency by 30%, reduced their handling time by 38%. And we can cut the errands by over 60%. I'm citing these data just to show you that with better data, we can reduce the trouble that people should take to do them. But this requires concrete action. It's not on the part of the government, and financial institutions like us has the capability, so we should just give back. So this is part of sharing and being open.

And on ATM machines, we actually delivered cross-provincial service. And so you might hear a lot of news coverage in Shanghai. In Shanghai, we can actually ensure that if you are in Shanghai, then you can do things at home.

For example, for a migrant worker living in Shanghai, work in Shanghai, if you lost your ID card, then actually you don't have to go back home to get -- to do these things. You can actually go to a CCB outlet to handle such things. So 14,000 outlets of CCB can overdeliver -- can deliver over 6,000 governance issues.

So actually, it's all enabled in Shanghai. You can handle the issues -- all the issues across the country in Shanghai. And then here in Jing-Jin-Ji, Beijing, Tianjin and Hebei province, it's all connected, and you can -- we've already delivered over 6,000 increase in other services, over 40,000 such transactions. We serve over 2 million people.

So I'm talking about these outlets because in the past, you have to really join a very long queue to process -- to get this service. But now the traditional function is disappearing. 100% can be handled online.

Now CCB has such a wide outlet -- network of outlets, and they are very strategically located. So just think about it from the Internet perspective. You can use them to handle governance issues to serve the public. And also, we can change them into workers' harbor so that those truckers and those cleaners and those express delivery people can come there to use outlets for bathroom, to get some water, et cetera. And of course, we also work with the disabled association to make it accessible to all the disabled people and to deliver better service to the marginalized group.

So if we can follow that logic, then we can actually make a difference to the everyday life of the ordinary people and provide more convenience.

I just touched on Yu Nong Tong moments ago. So this is our support of the governance. How can we better ensure a fairer and more equal distribution of financial resources? When it comes to rural revitalization, a very important point is that since we've just completed the most important battle against poverty, in order to consolidate this achievement without financial resources, you can hardly make it sustainable. How can we take -- build on the very successful battle against poverty and develop the rural areas? Financial resources are really the most important resources that you should put in place in the first place.

So the Yu Nong Tong project, I just mentioned the number across the villages, we just want to put our tentacles there, in those villages, so that people living in those remote areas can enjoy the services, those people that grow crops, that -- those people that actually raise animals or animal husbandry can get such services. So it's part of the governance.

On the other hand, it also gives us a lot of opportunity to grow new business. And of course, we're also trying to work in the field banking plus governance. And so let me give you one more example. We established those specialized platforms to enable payment products. And this alone, in medical diagnosis, we actually did over 10 -- CNY 100 billion in business. So finance can actually also make a profit out of business for the majority of people. It's better than those NIM-based profit because we can make a difference to the society and really tangibly improve people's life.

And for us, people working in the banking industry, we also feel a very strong and high and lofty sense of mission. As a financial practitioner, we can actually serve the people and give back to society. And that is really quite an inspiration for us and for our staff. So under new development strategy, we really can do a lot of things, and there can be a lot of opportunities so that we have the opportunity to really better serve the society. Thank you.

Unidentified Analyst

PIMCO, [Joan Han]. I'm [Joan Han] with PIMCO. My question concerns asset quality. Because in 2021, the overall asset quality, the whole banking industry, including CCB, was looking up. However, there have also been some risk exposures in certain fields. So now with the triple whammy from the real economy this year, so my question to the management is that, what's your view on the trend in this year's asset quality and credit cost? I'd also like to ask your view and judgment and also some countermeasures relating to the real estate industry. So CRO Cheng Yuanguo.

Yuanguo Cheng

Thank you. Thank you for this question. Now the economic operation is so far stable. And of course, we have made important preliminary progress in guarding against the risk. So in 2021, we actually maintained the stability of the risk. The NPL ratio is 1.42%, down by 0.41%. So we know the risk exposure is closely linked with the overall economy and also the endowment of our resources and also the internal management capability.

This year, we will continue to deliver very strong management to deal with this triple whammies like the geopolitics and real estate, et cetera. So -- and of course, we'll also try to make our countermeasures even better targeted. So we expect stability in the credit costs.

On the one hand, Chinese economy is still improving in spite of the difficulties. This long-term rosy prospects for Chinese economy remain unchanged. In the first 2 months, we can see that the major economic indicators are showing improvement. That further bears it out. And then we will actually pay attention to the 3 missions and 3 measures to further improve our credit mix. We will continue to boost our -- the inclusive finance, consumption finance and rental house support. So assets in these fields are overall good.

And then we will continue to increase our efforts in the disposal of nonperforming assets. And then fourthly, we will also try to improve our governance. We have always been adhering to the balanced, coordinated and sustainable strategy to improve the comprehensive and smart risk management and improve our capability. And of course, we have also optimized the pre-lending process and strengthened the lending procedure and post-lending management. Of course, we also focus on the weak links and post-lending process and, of course, brought the most out of the latest technology.

With regard to the real estate industry. So in the process of developing the new -- a new development strategy, maybe it's very hard for us to avoid certain risks in certain fields. Now the fluctuations in this field gives -- gave us some -- pose some challenges for us. But now real estate is going on the right path. But this will not affect the overall stability of CCB.

In 2021, our asset quality in real estate remained stable. NPL ratio was lower than the average NPL ratio in corporate loans. And the proportion of the real estate lending was still pretty small and the impact was manageable. And real estate had an impact on financial and economic stability, and the central government economic meeting continue to decide to squeeze out the bubble in the real estate industry. And of course, we strengthened risk mitigation.

As a next step, CCB will continue to implement the deployments of the central government, and we will continue to improve the risk mitigation and promote restructuring and promote the basic rental house development. Of course, we'll also pay more attention to the risk profile of the industry to maintain the stability in the industry.

Operator

Next question comes from Shaodao Yan [ph] with the insurance newspaper of PBOC.

Unidentified Analyst

My name is Shaodao Yan. [Ph] So I'd still like to follow up on the previous question. You just mentioned that we need to support the new financing (sic) [New Finance] needs. And of course, we also need to increase our support in key areas. So in real estate, the rental house support has been the call of the government. And the government report also mentioned that there should be more development of the long-term rental house and basic housing. And CCB has also tweaked its policy in response.

In the past, we -- people went to CCP to buy a house, and then people went to [BBC] to -- go to [BBC] to [greenhouse]. So I'd like to ask your measures in this regard. And of course, the lending in the rental house, which has already been included into the lending concentration management for CCB, how much of an impact does it have on CCB? And the personal housing loan is a traditional advantage for CCB. And what's your strategy for this year? And I'd also like to ask about the proportion of real estate lending. And so it's slightly down in 2021. Will there be more changes in 2022?

Unidentified Company Representative

Thank you for the questions. So if you want to rent a home, then come to the CCB. And this has been recognized by more and more people. And this itself is the best approval of our achievements over the past 4 years of work. So people have been paying close attention to rental house -- basic rental housing, et cetera, and local governments have been coming up with a lot of the specifications for implementation.

And the environment is improving. And CCB, of course, will make the most out of our experience and, of course, take advantage of our leg up to do a better job in the field. And now we're focusing on three things. First, on the financing. And we are improving our financing service. Now we actually have the evaluation and screening mechanism. On that basis, we can increase our support for house rental. By the end of last year, the balance in this regard, it topped over 3 -- CNY 130 billion. And this year, we also witnessed very strong growth. In the meantime, we are also providing the green service. This can help clean the exit channel and attract more funds into the field so that we can have a virtuous cycle.

And we try to supply more housings, and we rely on our CCB housing to use a different method to ensure the sources of those housing and including the renovated rental housings for those existing housings. And also, we try to build up new houses for security housing. And we use an innovative model of existing housing to use a existing or those housings that are not in use. So we have more than 129,000 houses. And under CCB management, we also have 179 for rental communities of CCB.

And next is for establishing the transaction platform of CCB leasing, that is for CCB general family. The registered user has exceeded 38 million with more than 150,000 registered corporate users and -- to help with the transparency of the market environment and to make the transaction more convenient.

We also established the security housing application over 59 different cities. So we are having those ecological systems establish. And when it comes to the loan concentration, we believe this can better support the commercial banks with the establishment or construction of market of leasing.

And for different local government, there are different regulations and guidelines being established for different local governments. So with the next step, we are trying to develop that system of specific guidelines and regulations and -- though we are seeing an increasing of influences.

So in individual mortgages or individual housings this is our advantage, and we will continue to support the healthy development of the real estate market. And we are seeing a increase of need and demand for individual mortgages, and we will be prepared.

And just now our VP, Mr. Ji, had introduced the details. So that's it for me. Thank you so much.

Operator

Next question from Shanghai Security Journal (sic) Shanghai Securities Journal. [Ph]

Unidentified Analyst

I'm Chong Chung Tsu [ph] from Shanghai Securities Journal. We know that inclusive finance is a very important strategy for CCB. And our loans are increasing very rapidly, but we remained a very good asset quality. So what are the keys and importance behind that? Also, under the overall backdrop of giving interest concessions, our loan interest of inclusive finance is going down. This will be very good for the real economy. But will we -- will our profitability be affected? So can the management help us analyze in this regard?

Changmiao Hu

Thank you for your questions. That is a very important question regarding inclusive finance as well as the sustainable development of our inclusive finance just now -- our Chairman had introduced before in 2021. This is a year for -- or rather, for the fourth year of CCB trying to continuously develop inclusive finance, so we have actually mentioned the balance. That is the overall RRR targeted cuts. And we also had number of CBRC. That's CNY 1.9 trillion. And so our Chairman mentioned that previously as well. So for last year, we had a increase of 31.6%. And for corporate customers, our customers has exceeded 1.93 million, an increase of 220,000 customers, that is corporate customers, very rapid, last year.

Also, for the inclusive small and micro businesses, just like you said, our interest is, on average, 4.16%, down by 20 bps compared to the end of last year. So that -- you can see we are trying to increase the quantity but are trying to reduce the cost. And our scope is more expensive. We are increasing our quality of services at the same time. Our CRO just introduced. So our overall NPL is 1.42%. And for inclusive finance, the NPLs is lower than the average NPL. So in this regard, we are stabilizing the economy and we are stabilizing the growth.

For small and micro enterprises, the country is providing them more support to give them interest concessions, the delayed repayment. So all this can contribute to their growth and development. So this is the external reasons that we can maintain a very good asset quality.

So on the other hand, we had a lot of implementation of digital innovation. So our inclusive finance is digital inclusive finance. And we are trying to increase the number of customers and trying to make the regulation more standardized. So we have a lot of external numbers leveraged, data as well as the internal accumulation of data. So different departments are working together in coordination to achieve this overall mechanism, and this is the internal reason. And that's why we can remain the risk very low.

Our country trying to encourage the commercial banks to better serve the small and micro enterprises. We also have a targeted cuts of RRR as well as exemption of taxes, et cetera. All of those are supporting policy, which helped us to reduce the cost of funding as well as taxes. We talked about the digital inclusiveness. And naturally, that is very low cost of operation. And we leveraged the digital inclusiveness. So our asset quality compared to the past, and just like the Chairman mentioned previously, the NPLs are very high. But right now, it is lowered. So for our costs, it's very low. Our tax is dropping. So that has given us a very good advantage to give interest concessions to the small and micro businesses.

And you mentioned profitability. Undoubtedly, our inclusive finance and inclusive loans at the current level with the support of the country really made a lot of contribution, which helped with the adjustment of the customers as well as our overall structure. And we are very confident, and we will continue to provide a good inclusive financial services.

Well, let me just add a few words. Actually, for all of the efforts of CCB in terms of New Finance, it's something that we try to build up our capability of serving the society with light assets So we must be prepared for the 0% interest rate environment. So we need to leverage our endogenous or internal capability to win over the trust of the clients. So I believe for the smart governance, the remote technology of finances, well, we talked about without technology, there will be no finance. All of the products will be combined with technology. So with regard to risk control, reduction of cost, we will see great improvements. So this is another concept with regard to New Finance.

Operator

Next question, UBS Securities.

Unidentified Analyst

I'm [indiscernible]. My question is with regard to technology. Fintech is the focus of many banks. It is also one of the 3 major strategies of CCB. We can see that CCB is trying to step up its effort in fintech area. There's a lot of platforms and products rolled out. So we were wondering, do we have any quantifiable indexes for the development of fintech as well as how fintech contributes to our performances? And in the future, what is our plan with regard to the input or investment of fintech? And last year, we rolled out the CCB Life application. And what are our considerations behind that? And what is our situation?

Zhang Min

Thank you so much for following fintech of CCB. Yes, in the recent years, we can feel that with the development of information, of technology, our user is moving online and is more scenario based. So the traditional model of financial services cannot fulfill the demand of the clients anymore. That's why we are using more concept of New Finance and we're trying to have more actions to build up this online channel of CCB Life so that in nonfinance scenarios, different customers can still have those habits and need of using finance. We need to be connected with our customers in this ecosystem so that we can have this transition.

So for our customers, CCB Life provide very convenient services, both finance and nonfinance. And we also have incentives to encourage them to have consumptions. So actually, for merchants, we have a 0 commissions strategy, and we leverage our traffic of our platform and operation capabilities to empower the merchants.

For local government, CCB Life supports different discounts of the local government. We also have different platform scenarios for low-carbon travel, beautiful countryside to empower the real economy. By the end of 2021, CCB Life has actually covering 326 cities with more than 34 million registered clients bringing in -- the application in with more than 150 merchants. So by now, we have more than registered users of 50 million.

So for CCB Life, it's just one area of our fintech application. Just like Chairman Tian mentioned, without technology, there will be no finance. So fintech has been incorporated into the overall development of strategy of CCB as well as for different areas of our business, just like the inclusive finance that you mentioned. We leveraged big data to analyze the credit as well as the business operation of small and micro businesses to promote the building of credit systems to restructure their service models and we can have a rapid development.

For intelligence government (sic) [intelligent governance], we can have this collaborative relationship with more than 29 provinces, and we can cover all different services from our outlets. So our outlets has become a governance lobby for our local people. We have more than 2.5 transactions or trade with regard to intelligent governance so that the daily affairs of our people will be reduced. And leveraging AI, leveraging big data, we've established this proactive and intelligent risk management system.

We have a safe operation platform. In 2021, we had -- fend off more than 80 million of attacks -- for cyber attacks. So those rely on the swift reactions and support of fintech. And for the input or investment of fintech in 2021, the overall amount is CNY 23.58 billion, an increase of 6.6%. In the future, we will continue to increase our investment in Fintech.

And we will also continue to build up a team of talent for fintech to have more inputs for R&D, for infrastructure. And we will build up this business platform for CCB Life as well as mobile banking and to have this integration of both online and offline scenarios for house leasing, inclusive finance, rejuvenation, green finance, smart governance, wealth management, all those investments, we'll see an increase of investment in fintech so that our increase or development of technology can contribute to our overall capacity of serving the society. Thank you.

Operator

Next question, securities newspaper.

Unidentified Analyst

I'm with a securities newspaper. So I'd like to ask a question concerning retail. So CCB has been the market leader when it comes to retail, and you're also the biggest retail credit bank. And now all banks are actually competing in this business and trying to grow their business. So given this landscape, what's CCB's advantage in retail banking in terms of personal customer exploration and channel development? And what's your plan and target?

Unidentified Company Representative

Thank you for the question. CCB has always been sitting a premium on the development of retail business. In 2021, personal business increased by over CNY 22 million and the daily average deposit increased by CNY 2.6 trillion and the AUM, personal business, increased by CNY 1.35 trillion. And the balance of personal loan stood at CNY 7.89 trillion. Now we are expected to maintain our position as the biggest retail bank. And the profit from this business stood at CNY 214 billion, accounting for 56.7%. So we believe that retail business of CCB has the -- these three advantages: first, digital operation plus big asset management plus the connection between corporate and personal business.

Digitalization has been a very striking feature. We have always been attaching great importance to digital operation. And digitalization for retail is also very important. For example, the identification of customers is digital based -- if we need to have very precise and scientific modules to locate our customers so that we can reach out to our customers, find those customers. And in the process -- of processing transactions, we actually work to build the ecosystem and we want to serve the customers in that ecosystem.

And we developed that agency salary ecosystem and the big retail ecosystem and the agriculture ecosystem. So now we have these loopholes for different groups of customers where we got a lot of value. And then the great asset management is also becoming increasingly important. Actually, we started from a very small area to actually promote a change for the whole asset management business. For example, we developed the main menu -- venue for the wealth management and also the so-called wealth community. And we also established this work platform for the account customers to enable our teams.

And with regard to the management system, we are trying to connect the wealth management to asset management and investment banking as a whole. And we also cover all the way from the investment research to post-investment management. The AUM and also personal AUM business, AUM of CCB, led the way. And the 37 Level 1 branches all witnessed their -- positive growth in the AUM and deposit balance. So basically, the asset management reputation of loans [indiscernible] is also increasing.

And then the personal and corporate business connection is also improving. The agency salary business and the agency social security service is improving, which actually promoted the personal business. These are the three features and advantages that CCB has. And when it comes to the personal business service and the channel development, we would also like to promote their further development also in these three fields. Thank you.

Operator

Economic Journal, Louie Yew. [Ph]

Unidentified Analyst

I have a question relating to green finance. We know that China is promoting carbon peaking and carbon neutrality, and a lot of financial institutions are also contributing and got their support from that policy. We also know that CCB has come out with a lot of action plan and also developed your green finance development strategy. I'd like to ask about the progress of these jobs. So what about the pricing and the asset quality when it comes to green finance?

Unidentified Company Representative

Thank you for this question. As you've mentioned in your statement, in 2021, the Green Finance Committee, which we established internally, and under that, we also set up the carbon peaking and carbon neutrality working group, we actually developed the 20 measure action plan and prepared our green finance development strategy and came out with our road map. And the international cooperation in green finance is also deepening. For example, we held the green finance international forum. And also, we signed the declaration for green finance. And of course, we became the official member of the green disclosure in 2021. And of course, we are strictly managing the environmental and climate risk which is part of our comprehensive risk management and credit extension management system.

In the meantime, with the support of the departments, we actually are promoting -- we're doing the stress tests for climate risk. And of course, we are also smoothly promoting the work in risk -- in carbon neutrality to make sure that we are okay with energy security. And you also asked about the specific measures we're taking in this regard. It's actually developing very rapidly. First, green loans are increasing. At the end of 2021, by the [PRC] standards, we actually had about CNY 2 trillion balance of green loans. And we pretty much delivered the regulatory requirement that the green loans should not be lower than the personal loans.

So we hit the -- we outperformed the targets because we are way, way above the growth rate in other categories of lending by 20 to 30 basis points -- percent, I should say. So actually, we effectively supported the climate work in this country. And the nongreen -- noncredit green business is also improving. In 2021, we undertook CNY 41.4 billion of green bonds by a big margin. And of course, we held over CNY 23 billion in green bonds by a big margin as well. And of course, we also issued the first ever sustainable green bond in China and Europe. And of course, we also issued the [EST Bond Index], green bond index.

So all of these showed CCB's efforts in green finance. So as a next step, we will continue to deepen the green contents in -- under New Finance system. We will provide even more collection of green financial products and services so that we can make green finance a new pillar for CCB's growth and new competitive edge of CCB. Thank you.

Operator

So, with Bank of America Merrill Lynch.

Unidentified Analyst

My question concerns the interest margin. It's very happy -- we're happy there to see that the interest margin stabilized since Q2 last year. But we also saw that the Central Bank further downgraded the LPR. So this year, there might be some more pressure for pricing. So I'd like to ask, in 2021, what's your expectation of the NIM in 2022?

Unidentified Company Representative

Thank you for the question. Yes, in 2021, the NIM at 2.13%, down by 6 basis points and NIM management is a big challenge and a point of pressure for us in -- on the asset, and we actually increased our efforts in reducing the fees so that we -- but we also managed to reduce the cost. And the lending cost and the interest rate cost is also down in terms of the liabilities, though the pricing has been changed, which actually helped smooth over the premium in deposit. However, the overall trend does -- was not changed. And in the process, the market competition for deposit is also increasing.

So this situation is hard to be breaking -- to be broken or to change. So on one hand, we increased our support for the real economy on the liabilities and through digital operation and asset management. And also, we increased management -- the asset management so that we can improve our capability to manage the interest-bearing business.

As you mentioned, the NIM stabilized in 2021. The net interest margin among peers is also a leader. We -- as you are, we are also aware that LPR was down twice in December and the 1-year down by 15 basis points, the 5-year LPR down by 5 basis points. So considering the downside, lending interest rate, and the pretty stable deposit interest rate and the two cuts, the RRR, last year, and also we expect pretty -- more downside pressure for the NIM -- for NIM this year, and this is a common challenge to all banks in China.

So [FCCB] will continue to closely monitor the external changes. And of course, we will also strengthen our risk study. And of course, we will focus on value creation and focus on New Finance and digital transition. We will take the opportunity at the national strategic implementation, consumer consumption upgrading so that we can optimize our asset liability structure to maintain our NIM at a stable and robust level. Thank you.

Operator

Next question is with Ms. [Li] -- from Ms. [Li] from [Hong Kong Business Journal].

Unidentified Analyst

So this is the third year we're having a conference call. And last year, we said that maybe next year, we can have physical meetings. So we just hope that the pandemic is -- can be over as quickly as possible.

So the performance of CCB grew very robustly. We also noted that CCB grew steadily. But in terms of the trend, it slowed down. So I'd like to ask the reasons for the slowdown. So I'd also like to ask about your expectation of the impact of the fee income. And what's your expectation of the fee income growth this year? And what will be your priorities in the future?

Unidentified Company Representative

So last year, the fee income is CNY 121.5 billion at 6%. So it's actually a pretty high level in the past 5 years in '20 and '21. In different quarters, the growth rate were 8.8%, 4.7% and 5.4%, respectively. So we can see that the growth rate had been pretty stable. And since Q2, we could see an incremental increase.

So as a state-owned bank, on the one hand, we were implementing the deployments of the CPC Central Committee and the state government, and we're trying to discharge social corporate -- social responsibility. We're trying to reduce the cuts and actually yield profits to the whole society and to lend stronger support for the real economy.

On the basis of the big reduction in 2020 -- in 2021, we further expanded our reduction. Of course, we yielded profits to MSEs (sic) [SMEs], so the fee reduction was no less than in 2020. For interest concessions and their impact on the commissions and fees, of course there are such impacts and influences. But we are trying to have more transitions and reforms and to cultivate our comprehensive servicing capabilities and -- for overall, our asset management, wealth management transactions. So those fees have rapid increases. So that is a great support for the increase of our fees and commissions.

You mentioned 2022. In 2022, we will try to step up our transition for intermediary businesses to connect closely with the need of the customers, to consolidate our traditional advantages, including the consulting, letter of guarantees, settlements of organizations, individuals. So those are our mature and developed businesses, and we'll continue to push that forward. At the same time, we'll also focus on key and important areas so we can leverage our advantage of multi-licenses. And we will increase our capability in terms of asset allocation and investment consulting for investment banking or trust, et cetera. And we will engage more and increase our capability to serve the asset management market.

We are trying to boost our capability for comprehensive financial services to have more innovative product, better serve our customer in terms of financing investment. Of course, we have a lot of innovative services, including house leasing, et cetera, to push toward the stable and sustainable development of intermediary businesses. And overall, it is expected that in 2022, our commissions and fees will see a steady increase. Thank you.

Changmiao Hu

Thank you, [indiscernible]. Well, due to the constraint of time, we will have the last question.

Operator

Next question is from China Securities Journal, Madam Shishuo. [Ph]

Unidentified Analyst

I'm Shishuo [ph] from China Securities Journal. My question is regarding for the transition of WMPs. So actually, by the end of this year, the deadline of... [Technical Difficulty]

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