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Dear investors, analysts, good evening. I'm [ Wong Lin Chong ], General Manager of Corporate Strategy and Investor Relations Department. First of all, welcome you to this Q3 Earnings Call of 2022. This meeting is held by Global Con Call. Others meeting are Dr. Guan Xueqing, Board Secretary of ICBC, Department of Corporate Strategy and Investor Relations or the Board's Office, Department of Corporate Banking, Personal Banking, Inclusive Finance, Credit, Finance, Finance and Accounting, Risk Management, Asset and Liabilities and International Banking. They will carry out exchanges with you and our Board Members such as [ Li Xiwen ], [indiscernible], [indiscernible] are all online to attend this meeting. Before Q&A, I'd like to brief you on 2022 Q3 operations. In the first 3 quarters, ICBC maintained progress and quality while maintaining stability. We achieved balanced coordinated sustainable development. We maintained economic fundamentals of the real economy and maintained economic resilience with our contribution and delivered a high-quality answer sheet. Our operation features in the following aspects. First, our core indicators achieved progress while maintaining stability. Our net profit recorded CNY 260.5 billion, up by 5.2%. ROA was 0.95%. ROE, 11.29%. Revenue around CNY 600 billion, up by over 1%. NIM was 1.98%, down by 5 bps. Similar to other comparable banks, provision coverage ratio 206.8%, down by 0 to 3 percentage points, showing high risk resilience. NPL ratio, 1.4% down by 1 bps. Overdue ratio was down 0.1 percentage points. Figures difference was negative for 10 executive quarters. Our asset quality continues to improve. We continue to serve the real economy. We extended CNY 5 trillion new investments in finance to the real economy. Our domestic RMB loans balance exceeded CNY 21 trillion. The increments ranks first and achieved year-on-year growth for 9 consecutive months. And in key regions, the loan growth was higher than other categories. The manufacturing loans was over CNY 880 billion in the beginning of this year. The balance and increments both ranked first. In terms of green finance, the balance was CNY 3.76 trillion, up by 34%. The financial investments totaled over CNY 10 trillion, up by 9.7%. Also MSCI ESG rating of ICBC has increased from BBB to A. Third, our customer ecosystem continues to pick up with higher market competitiveness. Our customer deposits was over CNY 3.65 trillion. Personal customers totaled over CNY 700 million. The increments ranks first and mobile banking customer exceeded 500 million MAU. In both totality and increments, both lead the peers. And our corporate customers also ranked first. In the future, the international and domestic economic situations are more complex. But China's economy remains positive trend. ICBC will continue to play a leading role to stabilize the economic fundamentals, and we will coordinate the operation of management and promote our high-quality developments. Now we enter the Q&A session. We have simultaneous interpretation. Please feel free to raise questions. Please identify yourself before raising questions. Thank you.
[Operator Instructions] The first question comes from [ Lin Jin ] of CICC.
My question is about credit extension. Could you introduce to us your Q3 credit extension and outlook for Q4? Recently, is the pace picking up? Also, we have seen the policy in financial instruments with innovation. What about ICBC's utilization of these instruments?
Thank you for your question. I'd like to invite the Corporate Banking Department to answer your question. Mr. [ Hu ], please. From corporate credit perspective for Q3, our corporate extension exceeded CNY 1.4 trillion, up by more than CNY 200 billion. For September, the balance was CNY 250 billion. In transportation and other infrastructure sectors, we have seen remarkable growth. By region, the key regions like Yangtze River Delta, the Greater Bay Area, the corporate loans increased by CNY 1.1 trillion. For infrastructure sector, we have seen stable growth. The project loans in the first 3 quarters has increased by nearly CNY 700 billion. CNY 600 billion is also for the infrastructure sector, which is an impressive growth. With national policy instruments, ICBC's projects and financing have seen large growth. Gradually, we are increasing the credit extension. In terms of the equipment renewal, we will implement the policies during the National Day holiday throughout the group. We have worked over time to extend the loans in these terms. We have done a lot. The demand totaled CNY 200 billion, and we have passed CNY 50 billion. Dr. Guan is making some supplements. In terms of corporate loans, manufacturing is a key region and then the infrastructure construction, including energy facilities, also green finance, which we have also seen remarkable growth and also inclusive finance for small and micro enterprises. Sci-tech innovation is also a key area. The structural contribution is remarkable. You also mentioned the growth in the next phase. Well, of course, we will accelerate the extension. Infrastructure loans in the next phase will pick up. We will continue to make up for the weaknesses, so as you support the recovery of the Chinese economy. For the PBOC's structural policy instruments, there are several tens of -- more than 10 sectors. ICBC will play a leading position and strengthen our marketing and supporting financing policies. For the sci-tech innovation, we will continue to support the national strategy and improve our sci-tech tools so as to effectively promote China's sci-tech innovation as well as key technologies. Next question, please?
[Indiscernible] from CITIC Securities.
I want to raise 2 questions. First is about NIM. The LPR quotation change and other conditions, I want to know the NIM trend of ICBC and the [ MM ] products. Because of the fluctuation in the capital market, we have seen that customers have low-risk appetite. I want to know your MM product service. And is there new changes on your business? Because you raised 2 questions, so I will invite 2 of my colleagues to take your questions. And the first, Mr. [ Chung ] will take your question. And second, our Director of Personal Finance, will take your question. On your NIM trend and outlook on NIM trend, I will make some opinions. Investors are paying attention to the NIM trends of first 3 quarters. Because of our general economy trends and because we are cutting fees, the benefits, the companies, so then, of course, LPR correlation change and it's a large change. First, we introduced lower interest to go downward. And second, there will be other influences on NIM. So on the asset side, we are lowering our pricing. But from ICBC's will on asset and principal that we are upholding is we will manage our risk pricing. In a choice of customer and product, we remain committed to the balanced approach. We will not abandon our risk management because of high pricing. But on the other hand, we do not allow low pricing. It is not consistent with our risk appetite. Seeing from the first 3 quarters, we remain in the same trend with other peers. In the first 3 quarters, we have pressure in the first quarter because the credit extension is very strong for ICBC and the competition is high. So, we can see in the first quarter, the NIM goes up in the first quarter. And in the third quarter, we focus on the cost of liabilities and we take other measures. And on the other side, we have linkage with other major banks to adjust the pricing. So, there are changes. We changed our listing interest rate in the September. But at the end of third quarter, our compound interest rate was down by 1 bps comparing to the last quarter. This is a remarkable change in the trends. And seeing from the trend of NIM, we can see a narrowing trend because the second quarter has seen a downward pressure of 70 bps in the first. So there are force contractions. And on the outlook, Dr. Guan has some of the future trends while answering the first question. And in the future, we will stabilize our economy, the entities and real estate economy. We have policies roll out in the fourth quarter. Fourth quarter is the most important quarter because we believe with this policies paying off, the credit extension of ICBC and structure will adjust. Because, for instance, the loans to infrastructure will be fully implemented. And with the policy rollout and our loans will also follow up. And we will make a reasonable distribution of our loan extensions. And this will further the balance of pricing. There will be further balance in our NIM trends. Thinking from the deposit side, because of the listing interest rates change in September, there will be follow-up increments. And since this change in the listing interest rate, the 3-year LPR is down by 15 bps. And this can encourage the deposit market structural change because the first 3 quarters, we have a lot of liquidity and because of interaction with core capital market, we've seen the risk appetite going up in customers and they have more appetite for the long-term deposits. So into forecast, the structures are changing. It's fair to conclude that NIM narrowing trends will change. And on the deposits -- and there is 1 bps going down comparing to the last quarter. And the NIM structure will be more balanced. And second question will be taken by Mr. [ Kim ] from Personal Finance. I think from the home market, yes, there is a fluctuation in the market. And the market players have been influenced. We have seen withdrawal of couple. And because of the COVID-19 and the internal and external environment, we've seen our investors are hedging risks. So the sales of our MM products have been hit. But because of our large scale effect, we still have room to maneuver. And in the 20th -- in report of 20th National Congress, we have to continue to expand our internal demand in the MM industry because we have to serve the common -- also all the people. So, we believe the future trends remain unchanged, and we focus on our high-quality companies, customers and we will provide MM products to those customers. And to the fluctuation, on the short term, we are following measures. And first, we will optimize our choice of products and customers, and we will increase the marketing effort to the low-risk MM products. And we will encourage the customer to buy more prudent MM products. And second, on the presentation, we use online, offline channels to showcase our products. We use 5 dimension plan to get support, to select our products. And third, in terms of the investment company, we have zero-risk products to help our customers and to give them products in transactions, investment fund and other categories. We will provide confidence and answer questions from [indiscernible]. And through our long-term companionship, we will help to raise confidence in the customers and encourage them to invest in the long term. I want to make some supplements. In terms of wealth management of our strategy as the first personal finance banking, we will remain committed to our strategy. We will build a more complete MM system through our customers. In the report of 20th National Congress, it has stated that we should help our citizens to divert their MM choices. So, we will help them to make money and secure their money. And second, our investment and our MM platform can provide a lot of different choices to our customers. And third, in terms of the product system change, we will provide customized product in terms of different risk appetite. And because we will still pursue sustainable growth and despite an increase in the personnel deposits and other MM products, have seen structural changes. This is household MM trends manifested in this natural way. The residents from MM product in China will see a more diverse structure. In direct finance, we will provide multiple roles to the bank. Next question, please? The next question is from [ Yi Jee ] from Guangfa Securities.
My question is about asset quality. For Q3's asset quality, could you please introduce to us the situation and also the impact? What's your take on the impact on the land fiscal situation? And also what's your outlook for the asset quality and the credit cost?
The Department of Credit and Investment Management will answer your question. For the first 3 quarters, the domestic situations, such as COVID-19 spread outbreak and international situations are complex and changing. We strengthened our risk management. From projects onboarding, management and disposal, we have strengthened our work to maintain the stability of the asset quality. You have seen the core indicators such as NPL ratio, overdue ratio and figures difference are all stable and making progress. You have asked questions about real estate industry. In the past year, we have seen the sale of the commercial housing and the development has both decreased. Against such background, our NPL balance and ratio in real estate industry have shown upward trends. According to the actual situation of the loans, we reflect the actual situations in the asset quality. We have seen that property loans proportion of the total is quite low, around 5%. And for the current property loans, we have fully provisioned. From the past disposal situation, the flat growth for property loans are of high quality. Our loss ratio has been low. Therefore, this impact of property loans to our general asset quality and profitability will be controllable. For our recent expansion of credit to property industry, we are implementing the national policies of macroeconomic adjustments and the regulation requirements, we are strengthening our investments and financing in terms of risk management. We maintained a stable expansion of credit to property industry. When risks are controllable, we carried out closed-loop management of capital, and we support the high-quality projects and support their financing needs. Mostly, we support the guaranteed housing, commercial housing and leasing housing. Secondly, according to market-based principles since rule-based law and rule-based principles, we are also implementing the M&A loan projects, certainly according to market-based principles and commercial sustainability principles. We work with the local governments to provide financial support to ensure timely delivery of the presold homes, such as extension of our recent situation. For the middle and long-term perspective, you have seen the recent policies from either local governments or central governments, we are supporting the property developers and the market recovery still takes time. During the process, our property loans may see rising NPL ratio. But from the mid- and long-term perspective, China is still under urbanization. The property industry will still see growth. The speed may be lower. But China's economy still has positive growth in the future. So, we believe the property industry will recover, and our asset quality has our full confidence. You have also raised questions about the local government financing vehicles impacted by COVID-19 spread outbreaks. In the domestic and international complex situations, we can see that the fiscal income has declined nationwide. The land income has also decreased. The fiscal operation reached a tight balance. In some regions, the fiscal balance may see mounting issues. However, from ICBC's perspective, for the regions with high debts for the LGFV, there asset quality may face pressure. But from the whole sector of ICBC, the asset quality is good and stable with controllable risks. For local governments debt, we will continue to implement the measures of risk resolution by the central government. We will not increase the implicit debt for the local government. And based on market-based principles, we will work with the local government to resolve the risks of the outstanding risks. At the same time, we will continue to improve our credit policy, rationally make the onboarding policies and to the regions of strong capability and the projects with ample cash flow. First of all, you raised questions about the industries of Q3 credit. If you refer to our Q3 report, it's the same as the interim results. The infrastructure loans performed well in terms of restructure and manufacturing. For personal loans, NPL ratio increased slightly, up by 7 bps. It's reasonable because of the impact of COVID-19. It's temporary, but the general NPL ratio is low, which was 0.32%. By regions, the Yangtze River Delta, Pearl River Delta and the developed regions, the asset quality has been good. This is the main driver of the growth of the Chinese economy. For individual regions impacted by the debt of the local government, we have seen the asset quality deteriorating. But ICBC's loans are for the LGFV on the municipal level or the provincial capital level, so the asset quality can be guaranteed. For the outlook, the general asset quality is good. Our NPL ratio was only 1.4%, and we have large capability to resolve the risks. And the risks exposure in reflection are accurate. Our provision coverage ratio was over 206%. So in the future, for ICBC's asset quality, we believe it will be stable. We are fully confident. In the future about the cost of the credit from -- for the first 3 quarters, our credit loss costs have decreased to 0.8% from over 1%, which demonstrates our strengths and control of new loans and our intensification of risks and also our selection of high-quality customers. In new loans, we continued our risk-neutral policy in the future. This paves the way for the asset quality in the future. So in the future, our credit costs will remain stable. Next question, please? [Indiscernible] from Haitong Securities.
I'm from Haitong Securities. I have 2 questions. First is about Basel III. Basel III has raised their requirements. I want to know more about -- so how about our capital adequacy ratio? Is it going to go up or down? And what measures we are going to take is my first question? Second question is that we noticed that the operating income, there is one item, it's relatively low, that is our other business income. And I would like to ask why is that? There's an obvious drop in terms of the other business income? And why is that? Because it seems that our net income and other income are both fine. Why is that?
But actually, there are very big questions and important questions. The first question, I'll give it to Mr. [ Zo Wei ] from Asset and Liability Management Department. And what's the influence of Basel III's implementation? And second question is about -- I'll ask [ Mr. Xu ] from our Finance and Accounting department to answer your question. So yes. So the first question about capital adequacy ratio. I'm afraid that Madam [ Li ] from Risk Management department is more authoritative because they calculated the risk weight. From our understanding, that is from the implementation of Basel III in terms of accounting the risk-weighted assets. The valuation models, there will be more -- yes, there will be more pertinent calculations and the introduction of Basel III into China. And since the new rules about -- and we could say that the Chinese regulators are quite prudent. Previously, we have the internal-based method. And we really meticulously and carefully implemented these new rules. And the regulatory policies are not released yet, and we cannot say anything on behalf of the regulators. But the general direction, it seems to me that it is favorable to us after the implementation. Because seen from the previous rules, you could see that the rules are more strict. And after the implementation of Basel III, we think that after the recalibration, it is favorable for us to relatively improve our capital adequacy ratio. But this is just our stipulation. And first, I ask Risk Management to say something. And secondly, it also depends on the structure, on the policy of the regulators. So Madam Li from Risk Management department? I think Mr. Zo answered the question very well. And I'd like to supplement that we are fully prepared for Basel III implementation. No matter in terms of the market risk or operational risk, we are doing our job. From the trend of the regulators, we do pay attention to CBRC's new capital management measures. Until now, we haven't received more exact news and the relative calculation. We are carrying out our work according to the regulatory requirements. Second question will be answered by Mr. Liu from the Finance, Accounting Department.
Other business income. The following, first, due to the capital market influence, we know that the commercial market -- commercial banks, we have some of our equity investment -- instruments. For example, we have a subsidiary hold debt swap, which was accounting to our evaluation last year. When we put it into our accounts is that we have a float profit of CNY 8 billion. But this year, due to the fluctuations of the capital market, the valuation is minus CNY 4 billion. This is just a floating loss. And we hope that in the future, it will float back. And then besides there's also a foreign exchange loss. We all know that FX this year, especially recently the US dollars appreciate. But for the same period of last year, US dollars depreciate. So the trend is different. So, we have a foreign exchange loss at about CNY 5 billion. And the third is about restructured deposit. And our transaction income, this is quite fine. And on that part, we have growth of CNY 3.8 billion. So as a result, considering the several factors, we have net growth of other business income. Staying on this one, let me supplement about Ch'inghai South Lake. It's not a loss. It is a reduction of floating profit. Because last year, we have too many floating profit. But this year, the floating profit decreased, but this share is a very good share. It is related to low carbon and related to energy. And the company generates a lot of float profit this year. So, I think that the valuation of the market does not influence our quality of ICBC.
Next question, please. Xu Ran from Morgan Stanley.
I have 2 questions. I have seen the reports. The regulator is encouraging big banks in terms of property industry and the infrastructure encouraging the big banks to support more. These loans have certain risks. How do you balance the growth of loans and risk control? Second, in risk pricing, the COVID-19 has been sustaining for years. The loans for the small and medium enterprises, if you see, the non-performing loans ratio. What's the impact on the risk pricing?
I will answer your first question. And your second question will be answered by the Department of Inclusive Finance. Mr. Xu, you are a Senior Analyst. You're seeing a big question through a small issue. Manufacturing has been a key region of our service. Our support for manufacturing has been in our AOA. China's manufacturing has advantage with complete sectors and chains. We are a strong country of manufacturing. We're in the process of building such a country. It is the fundamentals of our country and the real economy. You have seen that the key of the economy is in the real economy in the 20th National Congress Report. We are a major pillar. We are positive about China's manufacturing, and we will continue to strengthen our support for manufacturing. Our first half year have seen remarkable growth in manufacturing loans. The effective growth and risk-neutral principles are balanced. We select the high-quality customers with proper products, and we strengthened the financial services through whole procedures so that these manufacturing companies can have a good financial environment. Yesterday, I saw news on CCTV, China's manufacturing has gained -- recovered growth, and the productivity has been picked up. So, I don't think that the market should ever doubt our risk control of manufacturing for property industry. Our developed loans and the rejuvenation loans totaled CNY 900 billion. The growth is positive in the first half year. We believe China's property industry is still a sector, which needs healthy developments. So, we will continue to select high-quality customers and implement the relative standards. And in a proper way, we implement the policies and conduct differentiated policies to support the stable development of the property industries. This year, a big challenge of the personal mortgage growth is lower than last year. This is from the temporary adjustment of the industry. In some cities, personal mortgage have been changing marketing environment. So the change is normal. So, I believe the relevant risks are concerned by the market. ICBC will continue the principle of houses offering habitation instead of speculation, and we will continue to implement the spirit of the 20th National Congress. And we will continue to provide our financial services. Your second question will be answered by the Inclusive Finance Department. First of all, I want to share with you the Q3 development in terms of your question, by the end of Q3, our inclusive loans totaled 1.5%, achieving year-on-year growth, up by 37.6%, leading the peers. So, our developments in this regard is quite good in terms of asset quality. The NPL ratio in this regard was 0.74%, continuing to decrease, down by 10 bps if you compare with the beginning of this year and lower than the group-wide NPL ratio. We fully developed the operation income and risks. We adjust the structures of customers, upgrade operation of business, empowered by technology and digital transformation our inclusive loans. [Technical Difficulty] And we not only provide financing, but we also provide intelligent services to generate returns for us. For example, the coordination -- the coordination between different enterprises also has our confidence. So, we will continue to maintain balanced development of quantity pricing and quantity and quality, and accelerates the high-quality development of inclusive finance. Next question, please. The next question is from [ Xian Shu Ming ].
I'm [ Xian Shu Ming ]. ICBC has a good performance in the 3 quarters. I have 2 questions. First is about the NIM. Despite the LPR quotation change in the first 3 quarters starts from the whole industry, the NIM still remained stable. But the situation is very hard to change. I want to know the NIM trends. How to improve the cost of liability? And second is asset quality. You have said a lot, but I want to know the collection and disposal limit in NPL. In general, we will see the NPL increase. But in the first 9 months, we've seen decrease of NPLs. I want to know your outlook on that in the future.
Okay. The first question will be taken by Mr. [ Cho ]. Because of the time limit, the listing interest rate change in September, there is less narrative in the third quarter report. So when I was answering the previous question, I have mentioned that. I've seen from our compound interest rate, interest rate was down by 1 bps. Another forward indicator I can share with you is that we have been monitoring the fixed deposit interest rates change. And since the change in the listing interest rates in the third quarter, the new interest payments of our deposits in the 3 quarters have changed. We have some change in that area. It was down by 19 bps. This is a remarkable change. So looking into the fourth quarter, this time it has changed, especially 15 bps in the 3-year deposits. And we are also dynamically monitoring the 3-year deposit growth. There have been structural changes. And the current deposit and fixed deposit structure is also changing. With all those compounded factors, we will see positive trend in the future. So that's my answer. And second question. Ms. Lin will take your question.
And then the macroeconomic challenges question. At the end of the third quarter, the NPL balance increased. Because of the downward pressure, we have some risk exposure. We also increased effort on the disposals. In the first 9 months, we have increased our effort in the disposal and NPL balance is on the rise. Another reason for declining NPL is that the growth rate is larger than last year. The growth by group caliber is CNY 2 trillion. Because of these 2 factors, our NPL ratio was down by 2 bps from the start of the year. And looking into the fourth quarter and next year in terms of asset quality, I think from the current situation, the downward pressure and internal and external environment issues will influence to the asset quality, but we will increase our effort in risk control and strengthen our disposal NPL. So going forward, we will have a stable NPL situation.
I have a few things to add. 3% GDP in the third quarter. And the region growth -- margin growth was 5%. LPR was going down. The main reason is that first, LPR ratio going down is caused by a few factors. First is the deposit increment is on the rise. So the base has been widened. That's why the NPL is going down. And second, the NPL balance has increased than last year. So, this actually caused the increment in NPL, but we have to make allowance for NPL. So we have strong ability to write off that asset. So, through restructuring and write-offs and less cash transfer, we have bought with that asset. And third, the leverage ratio of NPL has gone from 1.8% to 1.29% this year [ in 6 ]. We collected more than CNY 2 billion of net assets. And such the provision coverage decreased 1 BP by 1 BP, and this has made room for the disposal of NPL amounting to CNY 2 billion. So that's why the NPL seems to be going down. But the trend is actually similar with the market. And second, you want to know about the outlook on the first quarter and next year. We can see the recovery trend of our economy from the data from September as relatively good. And we believe the fourth quarter will do better than the third. And second, we have diverse momentum for economic growth. The high-quality growth will sustain. So, we have confidence for next quarter and next year, and we believe in the growth in our economy. The capital market have some over concern to our economy and have less confidence in our economy. Thank you for your question. [ Alex ] from UBS.
Good evening. My question is about our operational cost. We see that, for the past several years, our operational cost is quite rapidly growing. And as compared to the pre-pandemic, yes, we see a very obvious increase. In terms of technology, we must have more input. Is there any other factors contributing to the increase of the operational cost? And looking to the next year, how is our prediction for the next year's growth for the operating cost?
Thank you for the question. Indeed, in general, the general -- you know that the cost-to-income ratio is relatively low among our Chinese peers to our comparable peers. ICBC's cost-to-income ratio, but of course, as a major bank, we also need to invest to the future. Especially we are in a technological revolution trend, and we need to increase our IT cooperation and scenario cooperation, and we also need to support our GBC coordination. And you could see that this year, we enhanced our strategic investment in this area. However, for the controllable cost, for example, our business fees, and we have this mentality that we need to be economical. And ICBC will obviously stick to the philosophy of being economical. But for some strategic investment, that is necessary. So in general, the increase of the cost for ICBC is rational, and it is sustainable. Let me supplement. I've been talking with investors for 6 to 7 years. Generally, investors earlier that our cost-to-income ratio is too low, and it might add our future development. So, in line with investors' expectations, we increased our input into our future. This is quite necessary for us to maintain our sustainable growth. And especially for the IT investment, it is very conducive to our future, and ICBC is also a very important strategy of the bank. And we also use the technology to enable our business development and enable our risk management. You see that you have -- we have growth in deposits. It is not simply that people tend to put more money into ICBC. It is rather a very good case to show that ICBC has built a very good GBC+ scenario, and we expand our market and increase our customer base. And this is also thanks to the enablement from our IT system. Jin Lin from China Merchants Securities.
I'm analyst from China Merchants Securities. I have 2 questions. First, just now the senior management has mentioned the [ Yahoo Securities ]. I would like to ask why ICBC didn't sell the shares of Yahoo company when the stock price is high? And second, assuming the some pressure of interest rates of LPR, what's the outlook for 2023? The model loan interest rate is linked with the 5-year LPR, and so is the infrastructure loans. So what's your outlook for income -- operational income for the next year? Beside there is a lot of policies put forward by the government. And how much equipment upgrading loans have ICBC extended? And it is said that the regulators has guided large state-owned banks to extend CNY 100 million loans to rejuvenate the economy. Is there any guidance received by ICBC? And what's your feeling for the trend of economy?
Thank you for your long question. For your first question, why didn't ICBC sell Yahoo company share when the stock price is CNY 34? I think the stock price is fluctuating. So, when we're making decisions for investment, we have established relevant strategies. The second question will be answered by Mr. Liu from Finance and Accounting Department.
I would like to make some supplements. I have asked the same or similar question to the subsidiary of ICBC. We believe that the Salt Lake Company has its competitiveness, because we have confidence in the company and we believe it has core competitiveness. So, we decided to hold the stock. And for its co-competitiveness, as Mr. Guan has mentioned, we believe the market will finally show its value by giving appropriate price of the stock. And second question about operation income outlook of ICBC. China now is undergoing the downward interest rate cycle. When interest rate is going downward, it's hard for our bank to achieve quicker increase in operating income. From the [ 200 to 300 ] for banking industry, you can see, there is some cycle in the operational income of banks. We are developing transaction banking business and Wealth Management business. Currently, the deposit and loan business has accounted for 80% of our business. If we can adjust our business structure and to decrease low-end deposit business to 50%, the impact of interest rate cycles will decrease as well. So, ICBC is putting ahead its strategy transformation in this regard. For your third question, Mr. Guan will answer.
The speed of extending equipment grading loans is appropriate. There is a lot of conditions for this kind of loan and a lot of procedures. So, on one hand, we will enhance our financial services. And on the other hand, we will follow some procedures and step up our loan extension in this regard to implement national strategies and policies. Fourth question is about regulatory guidance by overseas news. There is always such kind of report, including the guidance for mortgage loans as well as for bonds. ICBC will consider different conditions of the real estate companies, adhere to our financing and the loan standards when extending relevant to loans. We believe that by conducting and carrying forward a series of policies, there will be changes in pickup in the real estate industry. Thank you for your question.
[ Shao Xing from Hana Securities ].
I'm [ Shao Xing from Hana Securities ]. I want to ask a question about the asset allocation. ICBC is large in scale. I want to -- credit structure is also very impressive. Because of downward pressure, I want to know, in the next 1 to 3 years, what's your plan of your asset allocation and your outlook, because there's still a lot of uncertainties going on, and I want to know your plan? And another question is, ICBC is leading in serving the rural economy. In the rural economy area, and under the circumstances of the large cycle, I want to know your strategic position.
[ Mr. Zhou ] will take your first question on the asset allocation. I noticed that you also noticed our skill. And in the situation of global pressure and uncertainties, I remember that a description of ICBC by some leader, our strategic plan and position is stability that gone over cycles and cycles. So, ICBC will remain prudent. We are neither progressive or passive because we are large in scale, so we also have quite a broad customer base. As a major bank, we also have some leading role in implementing the macro policy. There's CNY 2 trillion increment in our loan in the first 3 quarters. Against this backdrop, we are playing the role of stabilizing the economy. Just as mentioned by the Company Secretary, and these are the choices made upon prudent consideration and manifest a balanced, coordinated and sustainable approach, and you mentioned our outlook of next 1 to 3 years, asset allocation and our strategic planning. In our 3-year strategic planning in terms of asset growth, we want to maintain a stable growth. And this year, we have the fast growth, but we will not be as fast as this year in the following year. Just as a monetary policy, it won't be the same every year. It will be a process of adjustment. So, in the following 1 to 3 years, you can see that ICBC will remain prudent in its asset allocation and then also in this credit and investment and the layout of credit and deposits. And this will manifest in the coming years. We will, on the one hand, maintain our stable growth and also our business growth. The second question is on serving the real economy and related arrangements. [ Mr. Hu ] will take your question. Thank you for your question. No matter thing from the nature of ICBC or the policies of the Central Committee or central government serving the economy, this is the main task of our bank. The ICBC Central Committee has stated that we have to prioritize serving the real economy. So, in these years, we stressed the importance of serving the real economy. In recent years, the credit extension, as you can see, we have put more credits in the manufacturing. And also, we extend more credit to the science and technology, manufacturing infrastructure, green credit and crucial finance, low carbon and energy. These areas are the key areas for the credit extension. And that's my answer. You have a question about strategy. So [ Mr. Zhou ] will answer further about your questions. I want to add 2 things. Thank our intermediacy. So thank the sound of customer to invest in the industries that can bring returns. So, as an agency, bank will service this economy, and this is a very fundamental requirement for banks. So this is the first point to make. And second, you talk about, in the larger cyclical environment, you want to know about our strategic position. Now, global-wide, MMT are making some [indiscernible] expansion has been global challenge. Inflation is high. This can be fully explained in the monetary theory. Another thing is that the dilemma of controlling inflation and developing economy. If you want to develop economy, you cannot add the interest rates to serving the real economy. And this regard is what the banks should do. Thus should be prioritized in the strategic planning of banks, and the same for ICBC. So, seeing from another point of serving the real economy, as a requirement for Chinese economic growth to add on those points. And ICBC's choice to serve the real economy is based on the requirements of [indiscernible]. I want to elaborate more on that. On October 16, ICBC has made announcement to serve the real economy and to get full place to our leading role as the major bank, ICBC have prioritized serving the real economy in our strategy. We serve the real economy in 3 different ways. First is to increase the investment and finance to the real economy. And second, increase the precisive finance to the real economy. We put special attention to the key areas. We coined as real economy to actively support market entity and to support the real economy. We will use the supply, ways to support us and force. We put great importance to the coexistence of our banks and the real economy so as to facilitate the high-quality environment. Thank you for your question. Next question comes from [indiscernible]
I have 3 questions I would like to put to the management of ICBC. In Q3, our loans, when they had to come to terms and how many of them are extended? Is there a comparison between this quarter to the previous 2 quarters? And my second question about -- on the asset side. We know that we have a lack of proper assets. And we are glad to see that ICBC in the Q3, we have a lot of asset growth. And in terms of asset growth, was our differentiated policies so that as compared to our peers, we can maintain a sustainable growth. It was our core competitiveness. My third question is about net profit. And due to the uncertainties of the macro economy, we know that the macro economy of the world is having a downward pressure. And in China, we have the impact of the pandemic as well. And [indiscernible] the economy may go downward in the future, and what our outlook to our -- for the next 3 years was the grow speed our net profit. And our dividend payout ratio and under what kind of scenario it is possible for ICBC to adjust our dividend payout?
I'll ask my colleagues. So, I'll answer all 3 questions. First, I ask [indiscernible] from Credit and Investment Management. Second, I give to [ Mr. Hu ] from the Corporate Finance Department. The third question will be answered by Mr. Wang of the Strategy and Investor Relations Management department. The ratio for extension of loans for the third quarter is, generally speaking, similar to the previous 2 quarters. There's no major fluctuation. Second question. Second question is about from the lack of proper asset. From Q3, I think that there is -- we have some improvement. The growth of our loans for Q3 is quite high. However, some of our policies could be summarized as the following. That is to closely follow the government policy and the policy to expand the domestic demand. And in the new markets, and we also follow the policies and the areas that are supported by the regulators, especially, for example, in the issuance of loans. And so, our call is the real economy. That is to say that we invest our assets around the growth points of real economy growth. Mr. Guan, let me supplement. You mentioned the lack asset for commercial banks, we understand it is that we do not have very robust effective loan demand. But for ICBC, we could maintain credit expansion. We have more loans issued and we are leading NPS and we also have some support for the ICBC's quality. And ICBC takes the initiative. We make an early arrangement of the policies and arrangements for our financing and investment. Second, ICBC's marketing team and our Tier 2 departments, that is our credit approval teams, for the -- they are very capable in terms of selecting our selecting clients, and we have a lot of effective reserves. Now, we still have a quite large amount of reserve -- because for some key customers -- for some very high-quality customers, they are willing to have this cooperation with ICBC. This is my supplement. The third question will be answered by Mr. Wang. But I think even Mr. Wang cannot correctly predict the net profit. So, I think if you now answer that question. And he will answer the question about the dividend. We could see that profit always maintain very good growth. And we've been through several economic cycles and faced the challenges. But I think ICBC's major feature is that we have business stability across different major cycles, and we have to face that in the next 3 years, we will maintain a stable net profit. Second, the dividend payout ratio. Our dividend is related to the price of the shares. Since our listing, ICBC has been -- it's always been the listed company with the largest amount of dividend. And our payout ratio is 30% in the last year. According to the current -- our Asia revenue -- return is 6.74. And while we maintain our net profit, we will also provide a very good return for our shareholders. Our ratio for dividend payout, I think this is very rational. We take into consideration of the profit growth and capital supplement and the return for shareholders. And we try to have maintain this stable ratio. And in the next phase, you can continue to pay attention to ICBC's asset price and to have make proper arrangements. Okay. Mr. Liu could make a prediction for the next 3 years. If you can predict, you can speak. So this is Mr. Liu speaking. Generally speaking, for commercial banks, the profit and income is under pressure indeed. You must have -- could reach the same conclusion from history. But for ICBC as a major bank, even the [indiscernible] could also do. We will keep adjusting and optimizing our structure, for example, this year, where our net profit grow better than our arbitration income because we increased the tax-free asset, for example. We have more investment into local government bond, sovereign bonds and the local government bond. It shows our income. It may not be very high income however, but if you calculate it from the perspective of after-tax profit, the performance is very good because they are tax-free. And to also optimize the structure and -- but in this interest rate reduction environment, you will also know that the commercial banks add certain pressure, especially about the dividend. You can also look at the cases from history. Commercial banks is a very special industry. It is subject to regulation about the CR. ICBC has the best CR level at -- CR is at about 18.8. This is really high. However, for our western banks, their CAR is also under pressure. And the regulators will have relevant requirement for the dividend. This is for your reference. The next question is from [ Zhou Mei Jin ] of Zhongtai Securities.
My question concerns your view on the development of LGFV, and the forward-looking requirements for this sector is also very high. So, how do you adjust according to the transformation of this sector? And what's the contribution in this regard? And for this group of customers, how about their competition?
[ Mr. Hu ] from Corporate Financing Department will answer your question about light asset transformation and diversification in this regard. And Liu from Finance and Accounting Department answers your question. The property industry's financing vehicle actually are heavy asset business. How can we transfer the heavy to light asset industries? How can we take a road of saving capital? This is a common issue for all banks. For the Chinese banks at present, when we want to serve the real economy, the heavy asset industries will be here to stay. But through asset securitization and also supporting policies and banks invest in the industries in this regard. We believe our balance sheet will be lighter, but at present, it still takes time. We still need regulatory support. At present, the regulatory requirements in terms of the ABS are not friendly to the bank's transformation. So, for banks, they also need to adjust their strategies and is related to the environment of the economy just for your reference.
Xueqing Guan speaking. First, for our customers, we have certain strategies. We also see some property industries financing vehicles are transforming themselves. The bank will -- according to their transformation, we will address our strategies of selecting customers in a forward-looking approach. We also see some transformation of the [ LGFP ]. In the past, the focus was property industries, but now is industry fund. In this process, we will play our role to provide financial services in a comprehensive way and also provide investments and financing with the comprehensive brand licenses. We will select customers to provide investments and financing support and also the financial services that covers all chains and procedures, especially we also see the central cities platforms. Some have high assets and liability rates. Secondly, you also mentioned the Chinese economic development structure, which is changing. It is also mentioned by the 20th Congress -- National Congress reports, which paves the development trend in the future. Fintech has a key focus. It's the driving force of the high-quality development and also green and low-carbon development is also the key region. In this regard, our investment and financing will change drastically. We will focus on the green development enterprises. Thirdly, for the category asset allocation, our asset category structures will change. For example, transportation, energy, facilities and other industries will be adjusted dynamically according to the customers' changing trends. In the structural changes, we will try to acquire more high-quality customers and serve the strategic and high-quality customers to promote their transformation so as we can acquire more opportunities to provide financial services.
Next question from [ Nomura ].
Currently, there is policies of guarantee delivery of properties in some localities, and some local governments are appealing for losing of loan extension policies. What's the policy of ICBC? Is there any changes?
Thank you for your question. Against the current background, the new -- either for new property loans or the delivery of our properties, we adhere to market-based deposits. This is also the requirement of regulators. Just now I have mentioned, we are conducting a stable business operation. We are adhering to the financial regulatory requirements as well as the policies of macroeconomic adjustment. We will support reasonable loan demand of quality property developers. For some risky projects, relevant departments and authorities as well as local governments have put forward some measures and policies. Some policy banks will extend special loans for some projects, especially for the sold projects that cannot be delivered in time -- due to the overdue of loans. And some suspended projects have been restored gradually. For commercial banks as us, we adhere to principles of market-based principles and we will cooperate with the local governments to offer some supplementary financing. But this kind of financing has conditions. We will provide financing for projects with sufficient value and collateral. Overall, we have sticked to market-based principles as always. And there's no major changes in this regard. [ Hu Zhu ] from UBS.
I'm from UBS. I also want to ask a question about the real estate economy, which caught a lot of attention. You had mentioned that policy banks have packaged loans through the real estate economy, but to real estate developers. Those unfinished housing projects have made further collaterals. But some of the projects cannot be sold. And where do you gain your money back? The money to the project is in shortage, so how are you going to manage that problem? And another question is also about the default in the debt of developers. I want to know the project-related number. I want to know the exact number on the amount in this unfinished housing project.
This is the first question. And second?
I want to know about the NIM. The NIM is going down, now it's 1.88%. So, just no more rate falling, so -- which will raise the bottom, and when will it bottom out, will be falling -- narrowing. So, will we get better in next year? And third is fee commission income. We noted that a lot of banks are experiencing difficulties in the commission income, but we also see ICBC have stable growth in this area. So I want to know more about the retail sales, including the insurance credit cards. I want to know the following trend on that.
Your questions are very good. You have 3 questions. First, [ Ms. Ling ] will take your question. The second question will be taken by [ Mr. Xu ] and third will be taken by Mr. Liu. [ Ms. Lin ] Thank you for your question. The unfinished project, each of them has their own condition. There is difference in the condition. The problems and legal products are complicated. Some of the projects that you said are already sold out, and money has been better by the developers, and now the house remains incomplete, and some of the projects haven't sold out their houses because the fund of developer is in shortage. There might be problems with upper stream and downstream. So, to lease the project, they fall into the description of remaining collateral. We adhere to that principle, so we can collect collaterals. There is something to be as collaterals. So in terms of these projects, the risk can be fully separated from their group. We will only give credit to these projects. You talk about the default in -- that of the developers. And you want to know the exact number of the unfinished projects. I can't give you an exact number, but we have very clear quality classification of the assets. For others, MPRO, we have made allowance for us. And that's all I have to say. To your second question, where will the NIM hit the bottom? It's a very hard question. This year, as we can see in the second quarter and in the third quarter, we can see the NIM is going down quarter-by-quarter. And we can see there is 1 BP going down in the compound interest. And on the other hand, the loan yield is also falling. As to the influence to the next year, the NIM -- the trend of NIM is flexible, you know better. These influences will carry out to next year. But one point I need to be noticed is the personal housing mortgage. We have balanced pricing the deposits. We have repriced in terms of the crossing date. The model of repricing and the LPR quotation change, the [Technical Difficulty] coming next year. And judging from the situation, and there are a lot of articles saying that the PR will going down further. And we do not know what will really happen and do have to be based on the policies of the [ revenue latter ]. If they roll out further policies, we will implement those policies. Mr. Liu also mentioned -- and Mr. Liu would like to share with me that Western Bank's main trend in -- under the consensus, and their NIM are going backward -- are growing. The NIM of some the American banks going down suddenly when they are hit, but now they are going up again. And I believe, with the micro policies being implemented, in the next year, we will have a moderate good economic situation. And we will make structural plans and the NIM will recover. And we don't know the exact time. Mr. Liu, please.
Disposal income in the first 3 quarters, we have showcased our advantage of sale in terms of FCI, we can see some other banks on agency fees are going down. Our sales of insurance are doing good -- doing well because we have a large customer base. We have a lot of challenges both online and offline to reach out to our customers in terms of credit card. After adjustment, our credit sales are also going up, and ICBC is trying to build itself as a transaction bank. We also focus on the settlements, and we have also seen growth in that area as a major bank. We have more stability, and we have a balanced approach. But of course, we are faced with challenges. We are adjusting our income structure, including the fee and commission income. One thing to add, [ Mr. Zhu ] said, we discussed a lot. If LPR and the NIM hit the bottom, this has to be staying with the turn of our monetary policies, the turn of monetary policy has decisive role in our NIM trend. We have some decision to make, but the monetary policy have the major say in this.
For the interest of time, this is it the end of the QA. Thank you for your strategic and insightful questions. In the future strategic planning and operational, we will absorb your valuable suggestions and promote our high-quality development. Dr. Guan candidly responded to your concerns and questions. We believe this can strengthen your expectations and conducive to your value judgment. Thank you for your long-term trust and support for ICBC and thank you for your long-term value investment in our stock. If you have any questions, please contact IR team. We will continue to hold any form of IR communications. It's the end of the meeting. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]