Bank of China Ltd
SSE:601988
Earnings Call Analysis
Q2-2023 Analysis
Bank of China Ltd
The bank has exhibited a positive growth trajectory, with operating income climbing to RMB 319.707 billion, equating to an 8.92% uptick from the previous year. Profits before provisions followed suit, rising by 5.72% to RMB 215.407 billion, and after-tax profits increased by 3.35%. This financial momentum is underpinned by a steadfast increase in both net interest and net fee income, which saw increments of 4.75% and 4.34%, respectively.
The bank has maintained reasonable earnings efficiency despite a minor decline in net interest margin, now at 1.67%. However, non-interest income ascended by 2.91 percentage points, and the cost-to-earnings ratio improved, decreasing by 0.57 percentage points to 25.77%. There's an ongoing optimization of assets and liabilities, with both seeing a near 8% growth compared to last year, leading to record highs in domestic RMB deposits and loans.
The bank's risk resilience is bolstered by a decreased non-performing loan ratio of 1.28%, and a provision coverage ratio at a robust 188.39%. These metrics, coupled with a solid capital adequacy ratio of 17.13%, signify a financially resilient institution.
There have been strategic gains in various loan sectors. Green loans surged by 31.99% to exceed RMB 2.62 trillion, and loans to inclusive small and micro enterprises grew by a notable 26.27%, surpassing RMB 1.55 trillion. Meanwhile, loan balances to private enterprises and personal non-housing consumer loans rose by 16.42% and 17.59% respectively, indicating a vigorous support for domestic demand and consumption.
The bank's corporate finance domain has strengthened, with corporate loans surging by RMB 1.39 trillion. The expansion extends internationally, with notable achievements in cross-border services such as the increased scaled e-commerce settlement business by over 130%, and a 10% growth in import-export trade financing. These developments highlight a savvy response to both domestic and global market opportunities.
Personal banking has seen considerable growth, with a customer base that now spans 516 million individuals comprising RMB 14 trillion in financial assets. Private banking customers also enjoy robust growth, amassing RMB 2.69 trillion in financial assets. Additionally, a substantial number of cumulative insurance debit and credit cards further exemplify product and service expansion in personal financing.
The bank plays an active role in bolstering SMEs, with an increase of 40% year-on-year in SME loan balances to $1.5 trillion. This financial support facilitates the increase in the customer base and ensures employment stability for over 1.4 million workers. The bank's commitment is also evidenced by special enterprise loans exceeding RMB 250 billion and intellectual property pledge financing reaching RMB 22 billion. Future prospects indicate continued support and strategic engagement with SMEs through a variety of financial and non-financial services.
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[Interpreted] Dear investors, analysts, and media friends, good afternoon. Welcome to the Bank of China 2023 Interim Results Release. I am Yu Ke, Security's Representative of BOC and General Manager of the Board Secretary Department of Bank of China.
Today's release will be co-chaired by me and [ph] Mr. Jia Tianbin, Spokesperson and Chief of Staff of the Bank of China. I see many friends here today in person and some are joining us online via video link or by telephone calling. Thank you very much for showing your interest in us and support of the Bank.
First of all, allow me to introduce to you the leaders of the Bank, who are attending today's release conference. They are President Liu Jin, Vice President Zhang Yi, Vice President Zhang Xiaodong, Party Committee Leading Group Member Cai Zhao, Chief Risk Officer Liu Jiandong.
In accordance with the regulatory requirements, we have specially invited Mr. Jiang Guohua, Representative as an Independent Director, to participate via video link. We have two agenda items today. First, I would like to invite President Liu Jing to make a speech on the performance of the Bank and followed by a question-and-answer session.
As a reminder, all financial figures presented today have been prepared using international financial reporting standards, unless otherwise stated. The performance presentation is now available for download from the Bank's website or can be viewed at the bottom of the live stream page.
Now I would like to invite President Liu to tell us more about the performance of the Bank.
[Interpreted] Good afternoon, investors, analysts, media and journalists. It is a pleasure to meet with you all again. The annual and interim results release conferences have become an annual engagement opportunity with all friends. Today, we are here again for our appointment and for the first time since the outbreak of COVID-19. We are back in the B2 venue of the head office building and we hope that we can once again deliver a satisfactory answer to our friends, who are present here in person and online.
In 2023, it was the opening year of the comprehensive implementation of the spirit of the 20th CPC National Congress. BOC conscientiously implemented decision-making and deployment of the CPC Central Committee and State Council, tightly focused on the primary task of high-quality development, strategically serve the real economy, prevent and mitigate risks, promote reforms and innovations for the trend of business performance, improving the first half of the year.
First, financial efficiency performance was solid. Operating income amounted to RMB 319.707 billion, an increase of 8.92% year-on-year, of which net interest income, net fee income increased by 4.75% and 4.34% year-on-year, respectively. Profit before provisions amounted to RMB 215.407 billion, up by 5.72% year-on-year. Post-profit after tax amounted to RMB 127.688 billion, a year-on-year increase of 3.35%.
Second, earnings efficiency remains reasonable. Net interest margin is 1.67%, down nine business points year-on-year. Non-interest income amounted to 26.81%, up by 2.91 percentage points year-on-year. Cost-to-earnings ratio is 25.77%, down by 0.57 percentage points year-on-year.
Third, assets and liabilities continue to be optimized. The group's assets and liabilities grew by 7.59% and 7.95%, respectively, compared with the end of last year. An increase in domestic RMB deposits and loans reached the record high. The share of net customer loans increased by 1.24 percentage points, and the share of customer deposits increased by 2.26 percentage points.
Fourth, risk resilience has increased. The non-performing loan ratio is 1.28%, a decrease of 0.04 percentage points from the end of the previous year. The provision coverage ratio is 188.39%, and quality of assets in key areas remain healthy and stable. Continuously strengthened and endogenous accumulation is steadily replenishing the external sources, the capital adequacy ratio stood at 17.13%, maintaining a sound and reasonable level.
In the first half of the year, in the face of complex and severe external environment, Bank of China resolutely fulfilled its role as a major bank, effectively combined the implementation of central government's deployment with the promotion of its own sound development, and achieved new breakthroughs in serving high-quality development, with new results in the development of its new major businesses.
Firstly, fully committed to the implementation of national strategies, the quality of service to the real economy has been continuously improved. In the face of the wave-like development and zigzagging economic recovery process, we have optimized our financial products and services, continued to increase credit support, helping to boost confidence and expectations, and cultivate endogenous momentum.
Actively supporting the construction of modernized industrial system, loan for strategic merchant industries and medium and long-term loans for the manufacturing industry grew by 45.46%, 22.56%, respectively, compared with the end of last year. Firmly established and practiced concept, green mountains and lush mountains, and lucid waters are invaluable assets. The balance of green loans exceeded RMB 2.62 trillion, increased 31.99%.
Contributing to the regional synergistic development strategy, loan growth in key areas such as Beijing-Tianjin-Hebei region, Yangtze River Delta, the Guangdong-Hong Kong-Macau, Greater Bay Area, etc., was significantly faster than the bank-wide average. Increasing support for key areas and weak links, the balance of loans in inclusive small and micro enterprises exceeded RMB 1.55 trillion, increased 26.27%. The balance of agricultural-related loans grew by 16.75%.
Efforts have been made to do practical work and solve problems of private enterprises, and the balance of loans to private enterprises increased by 16.42%. It has launched the 1,000 Jobs 10,000 Homes campaign, which issued more than RMB 120 billion in specialized loans for 27,000 small and micro enterprises, benefiting more than 1.4 million workers. Supporting the expansion of domestic demand, promotion of consumption, personal and non-housing consumer loans grew by 17.59; serving the high level of opening up to the outside world, granted over $290 billion of credit support to countries along the Belt and Road.
Secondly, actively responded to the needs of enterprises and effectively consolidated the foundation of corporate finance business together with a majority of market players, stepped up credit investment of domestic corporate loans increasing by RMB 1.39 trillion, seized market opportunities and built a strong customer base with increased domestic RMB corporate deposits hitting a record high in the same period of the last 10 years.
The average daily deposit market share continued to rise. The number of direct and inter-participating banks in the RMB cross-border payment system, the SIPs, remained the first in the industry. The number of clients of business scale of the custodian service for qualified foreign investors, QVs, and agency service for overseas central bank-type institutions, ranked among the top in the industry.
As the only main cooperative bank for central counterparty clearing, the bank helped the official launch of SwapConnect, promoting foreign trade stabilized by its scale and optimized structure. International trade settlement, cross-border RMB settlement clearing, cross-border guarantee and cross-border fund pooling of domestic institutions maintained a leading position in the industry.
The scaled cross-border e-commerce settlement business has increased by more than 130% year-on-year. The volume of import-export trade financing has increased by 10% year-on-year. Driving PNC's digital transportation, the share of the new PNC online loans increased by nearly 80%, the size of pension trustee funds increased by 12.59% from the end of the previous year.
Thirdly, the bank has always adhered to the people's position, and capacity of personal financing services have continued to improve. The customer and business base has been continuously optimized, with the full number of personal customers reaching 516 million. The scale of full financial assets of personal customers has reached RMB 14 trillion. The scale of financial assets of private banking customers has reached RMB 2.69 trillion. Cumulative insurance debit cards have reached 660 million. Cumulative insurance credit cards have reached 142 million.
Starting from the financial needs of the public, we have created a full journey service accompaniment model and improved the BOC Investment Strategy Global Investment Advisor Information Service System. Enriching the product shelf and further increasing the market share of the balance of financial products distributed to individual customers. Expanding consumer finance scenarios providing differentiated housing credit services, accelerating the online transformation of non-housing consumer loans, consolidating the service advantages credit card, automobile installment products, consolidating the business foundation in key consumption areas.
Fourthly, firmly grasp the opportunity of opening up. The traditional strength of the financial market is making steady progress. Increase investment in local bonds, green bonds, and other key areas in the RMB portfolio. And maintain the first place in the market in terms of investment volume and green debt financing instruments.
Continuously exerting the professional advantages, the market share lead in settlement and the scale of foreign exchange continue to expand, underwriting of asset securitization, panel bonds, Dinsen bonds, China offshore bonds, and other official products remain number one in the market; created a new fortune to serve the two-way opening up of financial services. Launched the BOCS and mentioned the global brand and continue to lead our Chinese counterparts in cross-border custody scale.
Fifthly, continue to consolidate characteristic advantages and our globalized and integrated operations have shown new highlights. Further utilize the century-old advantages and promoted international economic and trade cooperation providing exclusive financial services for the China Central Asia Summit. As the president of China-France Enterprise Committee, we successfully co-organized the Sino-French Entrepreneurs' Symposium.
The contribution of pre-tax profits of foreign commercial banks increased by 4.45% points year-on-year, the market share of deposits along the foreign currency companies expanded. The representative office of Papua New Guinea was opened and overseas branches cover 63 countries and regions around the world. Deepened regional intensive management and steadily promoted the construction of offshore regional headquarters. The comprehensive operating companies developed well with the BOC Wealth Management, BOC Fullerton Deposit and Loan, BOC Consumer Loan, BOC Group Assurance, BOC Insurance, and BOC Tristar Life, Samsung Life premiums all increased their market share.
Sixth, in-depth promotion of scientific, technological innovation, digital transformation and to empower our business with new breakthroughs. Accelerated process of building enterprise-level architecture completed the commissioning of new debit card and credit card lines and the full rollout of WEO domestic branches restructured and upgraded new generation integrated group anti-money launching system.
Application of enterprise-level technology platform has begun to show results. The daily transaction scale distributed architecture has exceeded two billion transactions with strongly supported business development and smooth operation. New results have been achieved. The digitization of key areas such as mobile banking, corporate internet banking, continuously operated smart counter service ecosystem, enriching government affairs and livelihood of other scenarios, promoted branch transformation.
More than 5,000 business-focused specialty branches have been established. Construction of the digital RMB ecosystem continued to improve. Sales effectively responded to risk challenges and achieved new improvements in our overall risk management capacity. In the first half of the year, U.S. dollar rates hiked interest rates several rounds. International financial market fluctuated frequently.
We insisted on saving for rainy days and knowing what to expect, continued to monitor the market, proactively adjusted the business structure, placed liquidity risk management in a more prominent position, responded to changes in the market in a forceful and effective manner, with the risk indicators remaining stable, increased control of non-traditional risks, incorporated network cyber-security, employee and production safety into a comprehensive risk management system.
Accelerated construction of an intelligent risk control system actively promoted the re-examination of risk strategy overseas institutions and proactively improved the risk management system of the integrated operating system, effectively controlled the credit risk, strengthening customer risk identification and potential risk mitigation, steadily promoted the disposal of non-performing assets, maintaining stable asset quality. Continuously improved the level of operational risk management, constantly strengthened the foundation of anti-money laundry and sanction compliance and shaped a compliance culture for steady development.
In the face of recent typhoons, heavy rainfall and floods in some areas of the country, BOC acted swiftly, activated emergency plans for key disasters in the first place, formulated specific measures for financial support to affected areas and opened emergency channels to ensure the smooth flow of financial services during the special period, increased credit support, simplified credit approval process, lowered financial costs, accelerated insurance claims. The Bank has actively assisted disaster-stricken areas in relieving difficulties and supported post-disaster production recovery and infrastructure reconstruction and has been working with the people in the disaster-stricken areas in Singapore through thick and thin.
Looking ahead to the second half of the year, we will adhere to the guidance President Xi Jinping's thought on socialism with Chinese characteristics in the new era, fully implement the spirit of the 20th CPC National Congress, insist on making progress amidst stability, consolidate stability with progress, give a foreplay to our distinct strength, continue to enhance our value creation and risk prevention and control capabilities.
First, focus on serving the real economy and show the role as a large state-owned bank. Insist on sufficient strength, stable rhythm, excellent structure, increase support for construction of modernized industrial systems, strongly support key areas such as small and medium and micro enterprises, green development, scientific and technological innovation, manufacturing, make every effort to serve the self-reliance of science and technology, coordinate development of the region, revitalization of the countryside, high-quality development for the population. Actively and steadily support the construction of public infrastructure like the Shantytown renovation projects. Practice the two unwavering principles, continue to improve the quality of service.
[Interpreted] Second, we will strengthen the foundation of business and enhance market competitiveness. We will enrich the product and service system, promote the synergy between deposit business in terms of volume and price and improve the efficiency and coverage of credit services and enhance the sustainability of financial support for the real economy.
Third, consolidate the advantages of a specialty business and unite the development synergy of the group. We are committed to cultivating overseas markets, seizing strategic opportunities such as RCEP Belt and Road, Guangdong-Hong Kong-Macau, Greater Bay Area, the New Land and Sea Corridor in the west, and supporting the internationalization of RMB and serving the country's foreign affairs, international economic, and trade exchanges. The integrated management insists on one policy for each division, highlights business characteristics, strengthens the synergy mechanism, and expands the value contribution of diversified services.
Fourth, promote digital transformation and change and stimulate the vitality of science and technology innovation. We'll accelerate the construction of enterprise-level architecture and accelerate the production application of a new patch of technology platforms such as privacy computing and Internet of Things.
Fifth, to improve risk prevention and control capabilities; we will continue to deepen the construction of a comprehensive risk management system, conduct a forward-looking research, properly respond to potential risks, improve our ability to control and manage risks of new forms, industries, and modes of business.
Dear friends, in the face of various uncertain, unstable, unpredictable factors, we will win new opportunities for high-quality development in responding to changes in the situation, demonstrate new actions for high-quality development in deepening the self-revolution, create a new situation for high-quality development in serving the country's overall situation, and walk the path of financial development of Chinese characteristics in a progressive manner with a sense of urgency so as to make more contribution to the country and nation. Thank you very much.
[Interpreted] Thank you, President Liu, for your excellent presentation.
Now we will have the Q&A session. So we will first invite analysts from this area to raise questions. So anyone who wants to raise a question can raise your hand.
[Interpreted] Okay, the first question goes to the analyst from Morgan Stanley. And you come a long way from Hong Kong. Please.
[Interpreted] Thank you for giving me this first opportunity. So I'm interested in the NIM. We know that there has been a lot of pressures on NIM. What's the driving factors? So how do you see the future of NIM, the trend in the second half of the year? Thank you.
[Interpreted] So President -- Vice President Zhang Yi will take that question.
[Interpreted] Thank you for your question. So we attach great importance to NIM management. In the first half of the year, the NIM of the bank was 1.67%, down by nine BP year-on-year. And it remained relatively stable compared with the peers. So, on the one hand, this reflected the advantages brought by the bank's unique business in the context of diverging domestic and overseas monetary policies. And on the other hand, it also reflects the effectiveness of the bank's implementation of high-quality development strategy.
As for the reasons for narrowing NIM, I think we have the following reasons. First, the decline of RMB asset yields remained the main reason. In the first half of the year, Bank of China supported the real economy and implemented the national requirements on fee reduction. So the domestic RMB asset yield was 3.52%, down 34 BP year-on-year. This is mainly due to the impact of the gradual repricing of loans as a result of the three LPR cuts in the last year.
One-year LPR and five-year LPR were cut by 15 BP and 35 BP respectively. And the RMB loan yield declined by 43 BP year-on-year. Meanwhile, the yield on bond investment decreased by 16 BP year-on-year. So these two factors combined has lowered the group's net interest margin by approximately 25 BP. This is the main reason.
And secondly, the impact of the decline in RMB yields was mitigated by the improvement in asset and liability structure and the decline in the cost of liabilities. So, on the RMB asset side, the bank continued to increase its support for the effective credit demand of the real economy. And the share of loans in interest-earning assets continued to rise by 0.8 percentage points to 67.5%.
So, on the RMB liability side, the bank strengthened its strategy of synergy between volume and rate of the deposit. And we have maintained a basically stable deposit structure amid the trend of deposit de-regularization and enhanced efficiency of the use of high-cost deposits with the cost of deposits declining by seven BP year-on-year to 1.84%. Meanwhile, the decline in market interest rates contributed to a 21 BP drop in the cost of interbank deposits and debentures. So these factors combined has boosted the group's NIM by approximately eight BP.
And thirdly, benefiting from the interest rate hike of the US dollar, the bank's foreign currency interest rate spread continued to improve, further alleviating the impact on the downward trend of the RMB interest rate cuts. Since the second half of last year, the Federal Reserve has raised interest rates for seven consecutive times for a total of 350 BP. And the bank's foreign currency asset liability structure still shows an asset-sensitive characteristic in general.
And the rise in market interest rates has led to a year-on-year increase in the domestic and foreign currency spread of foreign institutions by 47 BP and 26 BP respectively, which has raised the group's net interest margin by a total of eight BP. So domestic factors has a 25 BP drag on NIM, and the other two favorable factors has increased NIM by 16 BP. At the same time, we're also concerned about the faster rise in the cost of foreign currency liabilities due to the impact of persistently high interest rates on large domestic US dollar deposits, resulting in a slight narrowing of the domestic and foreign currency interest rate spread compared with the first quarter.
And this marginally weakens the contribution to the group's overall NIM. So therefore, looking forward into the trend of the second half, the downward pressure on NIM is still great. Domestically, LPR was cut twice in June and August this year. The one-year LPR and the five-year LPR was lowered by 20 BP and 10 BP respectively. As a result, the lending rate level will be further reduced, driving RMB spreads to continue to go down. And from an external perspective, since this year, the Fed's interest rate hike has weakened, and the market expects that the interest rate in the fourth quarter hike will be close to an end, so the bank's foreign currency interest rate spread have limited room for improvement.
So in the face of downward pressure on the NIM, the bank will adhere to the strategy of high-quality development and do a good job of active management. First, continue to coordinate volume and rate to promote high-quality development of our liability business. On the one hand, we strengthened RMB liability cost management. We will focus on the improvement of the service capability of key products, such as cash management and supply chain finance.
We will promote the growth of funds with high stability and low price sensitivity, such as the settlement category, and optimize the deposit structure. On the other hand, we continue to optimize the liability structure of foreign institutions by focusing on key institutions. We will focus on key customer segments, consolidate the foundation of high-quality deposits, control the proportion of active liabilities, enhance the diversity of liability structure and the stability of funds. So we'll mainly focus on domestic RMB deposits and overseas foreign currency deposits.
Second, we will optimize the asset structure and increase support in key areas. We will continue to strongly support the real economy, increase the proportion of loans and assets, and further strengthen financial services in innovation, manufacturing, green loans, and private economy. On the other hand, we will focus on expanding the channels for utilizing foreign currency funds, give full play to the traditional advantages of foreign exchange business, increase investments in foreign currency loans and bonds, and enhance the level of return on foreign currency assets. Thank you.
[Interpreted] Thank you, Vice President Zhang Yi. Next question, please.
Jiang Shuai from CICC.
[Interpreted] Thank you for this opportunity. My question is about loan supply. So the major banks are increasing their loan extension quite quickly. And in the June Politburo meeting, it further proposed to strengthen counter-CICC local adjustment. So in terms of the whole extension of loans, how do you evaluate this year's credit supply plan? And in terms of structure, the central bank has indicated that it will continue to provide structural support to inclusive finance, green, low carbon. So what is BOC's plan? Thank you.
[Interpreted] Vice President Zhang Xiaodong is responsible for corporate finance and is very familiar with credit business. He'll take your question.
[Interpreted] Thank you for your question. Since the beginning of this year, BOC has adhered to the general principle of seeking progress while maintaining stability, has given full play to the role of a major state-owned bank as a stabilizer, accurately conveyed the requirements of monetary and fiscal policies, and actively met the financing needs of the real economy.
In terms of total volume, as of the end of June, the bank's domestic RMB loans has increased by RMB 1.46 trillion, a record high for the same period in history, and we had consecutive amounts of year-on-year increases.Structurally, the bank continued to increase its support for key areas and weak links of the national economy and has implemented a series of structural monetary policies.
In the first half of the year, the growth rates of the bank's strategic emerging industry loans, green loans, and inclusive loans to SMEs has reached a 45 percent, 32 percent, and 26 percent respectively, higher than the growth rates of all loans, and the leading role of credit supply in key areas has steadily enhanced. We have given full play to its international advantages and has granted credit support of more than US$290 billion to countries in the Belt and Road Initiative, and its ability to serve high-level opening up continues to improve.
At present, the domestic economy is operating steadily and positively, but it is also facing difficulties and challenges. Opportunities and challenges both exist, so in the second half, the bank will unswervingly implement the decisions of the CPC Central Committee, take initiative to play its role, and continue to make great efforts in high-quality services to the real economy and high-quality service to China's modernization so as to realize its own high-quality development in the service of the country's overall situation.
First, we'll give full play to the pillar role of us as a large bank to effectively support the real economy. The bank will be forward-looking in coordinating the macro monetary and fiscal policies, so based on the needs of the real economy, we will tap into our credit growth points, identify the direction of strength, continue to expand the scale of new loans on the premise of controllable risks, enhance the stability and sustainability of credit growth, and going all out o help the real economy to rebound and to boost market confidence. We expect that domestic RMB loans for the whole year will realize a significant year-on-year increase.
Second, we'll take a proactive approach in connecting structural monetary policy and accurately support credit supply in key areas. Especially in supporting SMEs, innovation, green development, and other key areas. We'll continuously expand the customer service to realize comprehensive effect of promoting consumption, stabilizing investment, and expanding domestic demand.
Third, we will provide comprehensive services for independent innovation, the construction of a modern economic system. We'll focus on advanced manufacturing and credit supply to specialized, refined, and featured businesses. We'll focus on restructuring of manufacturing loans, increase the proportion of mid- to long-term loans in the manufacturing sector, increase support for key industries such as integrated circuits, new energy vehicles, lithium batteries, and communications equipment manufacturing to promote the high-end, green, and intelligent development of the manufacturing industry. We'll make every effort to meet the financing needs of the real economy for green and low-carbon development and steadily increase the proportion of green credit. Thank you.
[Interpreted] Thank you for Mr. Zhang Xiaodong and [ph]Yan Leizhi from UBS. And he has come a long way from Hong Kong.
[Interpreted] Thank you for giving me this opportunity. My question is about fee-based income growth. So in Q1, the fee-based income has declined a little bit, but in the first half of this year, it grew by 4%. It means Q2 has been very good. So what are the main drivers of fee-based income growth in the first half of the year? And could you share with us more details about agency sales, settlement, clearing, and credit cards? What are the major trends? And how do you expect the growth of fee-based income in the second half?
[Interpreted] Thank you for your question. So the management has talked about the fee-based income growth in the annual results release. So we have reversed the negative trend of fee income growth. Mr. Zhang will take your question.
[Interpreted] Thank you very much for your question. It has always been a concern of many analysts and the bank. In the first half of 2023, the group's net fee income amounted to RMB 46.38 billion, an increase of 4.3% year-on-year. And in Q1, a drop of 0.8%. So now we are back in the positive range. As you actually mentioned in your question, we had two driving forces. On the one hand, we fully grasped the opportunities in market development, continued to intensify our efforts to serve the real economy, realized a faster growth in syndicated loans, driving 42.3% year-on-year increase in handling fee income from syndicated loans.
Meanwhile, the gradual recovery of personal consumption and cross-border activities led to a year-on-year growth of 16.7% in bank card handling fees and 13.8% in private international settlement fees. On the other hand, we continued to intensify our business development efforts. We strengthened our corporate customer base and optimized our comprehensive financial services to them. And also, with the corporate domestic settlement fee income up by 5.9% year-on-year, we expanded the scale of pension custodianship.
As President Liu said in his opening remark, he talked about the growth of pension business. The fee income increased by 64.1% year-on-year. In addition, we strengthened our insurance marketing efforts in-line with the growing awareness of insurance in society as a whole, leading to a year-on-year increase of 29.2% in handling fees from insurance agency sales and 38.6% in handling fees from insurance custodianship. And of course, there were also individual items that did not perform very we'll.
The capital market-related fee income from funds, wealth management, and commissions from buying and selling stocks on behalf of customers continued to grow negatively year-on-year. So we all know that for the whole capital market, the total net asset value of domestic market-wide funds was basically flat year-on-year. The total net asset value of equity and hybrid funds declined year-on-year. The scale of wealth management declined, as a result of which the banks' commission from fund distribution and wealth management businesses decreased by 5.6% and 29.2% year-on-year, respectively.
In addition, the turnover of the Hong Kong stock market hovered at a low level. The banks' commission income from the sale and purchase of stocks on behalf of customers dropped by 30.7% year-on-year. In H2, the bank will, on the premise of building a bottom line of compliance, continuously increase the business development efforts, maintain a positive growth trend in fee income by providing customers with high-quality services.
First, we will seize the opportunity of continuously cultivating and expanding market players to improve the quality and quantity of customer accounts and consolidate the basis for the growth of settlement and clearing fee income. Second, the bank grasps the national policy guidance of expanding domestic demand and stimulating consumption growth and enhances the precise marketing to customers, so as to maintain the growth trend of fee income from bank cards, consulting and advisory services. Third, we will give full play to the bank's advantages in globalized operation, promote the growth of international settlement fees and consolidate our position as the No. 1 bank in the market share niche.
At the same time, it should be noted that the future trend of the capital market remains an important factor affecting the growth of fee income. Many positive signs are observed. We expect the capital market to perform more robustly, which will correspondingly improve the downward trend of related handling fee incomes. We will also respond proactively by optimizing our product portfolio to minimize the impact of uncertainties arising from the volatility of the capital market.
[Interpreted] Thank you, VP Zhang Yi. More questions, please. From Taikang Fund, Mr. Ji.
[Interpreted] I'm Ji Yixuan from Taikang. So, thank you very much. I want to ask a question about banks' asset quality. Because we are all concerned with the real estate and urban investment sectors, I want to ask the management to introduce the latest changes in exposure and asset quality of real estate development loans, mortgage loans, loans to urban investment platforms, and how do you see the trend of the evolution of the related risks? Thank you.
[Interpreted] I want to invite CRO Liu Jiandong to answer the question.
[Interpreted].Thank you for your question, Mr. Ji. Yes, these are the two major concerns of investors. The property market is an important pillar industry in China, and we already have consensus that it is undergoing a stage of adjustment. The operations on property developers have encountered certain difficulties. There are exposure of debt risks, especially regarding leading property developers, which affects the market expectation. In the medium to long term, China's property market is shifting from the past high-speed development stage to a stable development stage, which is determined by the property market development stage evolution, market supply-demand dynamics, etc.
Recently, the first tier cities, for example, in North China, in Guangdong, and some other places are supporting the rigid, improved housing demand. Tier-2, tier three cities are also introducing new property control policies, which can boost market confidence. The new policies will take time to show results and effectiveness, but in the whole process, we believe that the market will continue to stabilize. For BOC, our property credit is growing at a steady rate with a reasonable regional layout. The growth rate of domestic property loans was basically in-line with other major peers in the industry. More than 70% of domestic real estate development loans were distributed to tier one, tier two cities.
In addition, the bank has done a solid job of credit risk classification, and the stage-by-stage difficulties in the real estate sector have been fully reflected in the asset quality data. We also had full information disclosure and a good balance of provisions. And also, we are implementing the national policies, and also we stepped up the resolution stage. And actually, we had RMB 846.2 billion of balanced domestic loans, corporate loans, an increase of 9.35 percentage points from the end of last year.
The non-performing rate is 5.11%, down by 2.12 percentage points lower from the end of the previous year, basically dropped by RMB 12.8 billion. And NPL was around 5.11%. With the gradual functioning of the market adjustment mechanism and adjustment optimization of the real estate market policies, the risks of the property enterprises are expected to be gradually resolved, and the quality of the bank's credit assets will continue to improve.
As for mortgages, in the first half of the year, the asset quality of mortgage loans was under pressure, and the bank intensified the efforts to clear and resolve the problem, and the non-performing balance of mortgage loans basically remained stable. Overall, by the end of June, we only had RMB 20 billion of NPL assets for mortgages, 0.49% NPL ratio, 0.12 percentage points higher than the previous term.
Overall speaking, the sovereignty of our residents, borrowers, are not deteriorating, and mortgage loans are still among the bank's high-quality assets, supporting the quality of the bank's assets. The next step would be to closely follow the direction of national policies, take regulatory requirements at the bottom line, adapt to the new situation, and significant changes in the supply-demand relationship in our property market, proactively study and judge real estate financial risks, and on the premise of controllable risks and compliance with the law, keep real estate financing reasonably moderate, and promote market-based liquidation of risks in the industry.
And also, as one of the biggest banks, we will continue to support reasonable needs for mortgage loans to fully implement the decision by PBOC and other ministries, especially how to deal with the existing inventory and incremental growth of mortgage loans continue to improve our services to the personal borrowers. You also talk about government-related usinesses. In recent years, with the downturn pressure of the economy, coupled with the deeper adjustment of real estate markets, some financing platforms in local areas had overdue credit and other risky matters and events. The regional risks began to emerge.
However, as far as the bank is concerned, LGFV business has remained stable in general. Total amount of credit granted is moderate compared with our peers, and the overall risk level is controllable despite the decline in asset quality compared with the beginning of the year. The bank will always adhere to the principle of commercialization and selected clients and projects, with relatively abundant cash flow, and the regional distribution is mainly concentrated in eastern developed regions of China, with a better level of cash flow coverage from platform clients and overall good repayment situation for matured loans.
In the future, we will continue to adhere to the principles of clients and a law-based marketization, always regard the non-creation of new LGFV debt as the red line, the bottom line of our business development. In accordance with the principle of prudent operation, we will continue to strengthen the concentration and control of government business and government credit risk management, pay attention to the changes in the regional credit environment, fully understand and analyze hidden debts of local governments, government performance and credit default records, and prudently assess the financial strength and debt burden of the local governments.
On the basis of compliance and market mechanisms, focus on supporting projects with a certain degree of return in the area's infrastructure to fill shortfalls, dual-use infrastructure for both flat and emergency use, basic public services such as health, pension, culture, sports and tourism. We will carry out local government-type business in compliance with market-oriented law-based principles, taking advantage of the strength and comprehensive operation characteristics as a large bank in accordance with the subsequent instructions of the country's debt resolution program.Focus on the assessment, control and evaluation of potential projects to forestall and defuse local government financing vehicle risks.
[Interpreted].Okay, thank you, Mr. Jiandong. We also have some investors and analysts joining us online via video link. We want to give them an opportunity to ask questions. The assistant, please read out the questions from online. Thank you. Yes, we can hear you.
[Interpreted].Management, good day. I am JP Morgan. Can you hear me? Thank you. I want to ask management how to study the trend of all credit asset quality in the year. In addition to the questions raised by my colleagues regarding the property and the LGF fee issues, what about other types of asset classes which we should be concerned with, especially overseas, inclusive credit card and credits? What is the situation of these areas? What is the outlook for credit cost trending? Thank you.
[Interpreted] Thank you from JP Morgan, Madam Lei. It is also related to risk management. Okay, I want to invite CRO Liu Jiandong to answer a question.
[Interpreted]. Thank you, Ms. Lei. So, in the first half of the year, the overall asset quality of the bank remained stable. As at the end of June, the group's non-performing balance amounted to $246.882 billion. The NPL, there was an increase of RMB 15.205 billion over the end of the previous year. The non-performing rate was 1.28 percent, a decrease of 0.04 percentage points over the end of the previous year. There are two main reasons. And also compared with the previous year, the non-performing loan dropped by 4.9 percent. The overdue rate is 0.98 percent, 0.12 percentage points lower than the previous year. There was a negative RMB 59 billion between the non-performing and the total balance, 15 months consecutively.
So, on the one hand, since the national economy has recovered post-lockdown, we are seeing signs of resilience and recovery of the national economy. And at the bank itself, we have taken some countermeasures. In particular, in the first half of the year, we looked into the liquidation and resolution of the non-performing assets. I mentioned this before. So, in the first half of the year, the resolution liquidation efforts were stronger, increased by 30 percent compared with the same period of last year. That stabilized the quality of the asset. And also I just said that apart from the property and government-related loans and credit, inclusive credit card and overseas credit card business are also areas where we closely monitor.In terms of inclusive lending, our inclusive business maintained a relatively good development trend in the first half of the year.
[Interpreted]. The overall NPR ratio is significantly lower than the average level of the bank as a whole. However, we are also concerned that since the beginning of this year, the operation of the SME client has been greatly affected by the external economic environment and the probability of risk exposure of SMEs with weaker risk resistance has increased. So, the bank will maintain its focus on them and flexibly utilize the support policy toolbox to further enhance the intelligent risk management and control.
And in terms of credit cards, the bank has intensified its efforts to resolve credit card and NPLs in the first half of the year. Although the cumulative amount of non-performing loans has increased slightly, asset quality has overall stabilized and improved, with NPL and special mention loans declining compared to the beginning of the year. So, NPL was 1.93%, down by 0.09 percentage points year-on-year, and overdue also declined. So, as the next step, we will continue to have forward-looking risk monitoring and early warning, maintain our collection and resolution efforts. We expect credit card asset quality will remain stable in the second half.
For external or overseas institutions, the global economic activity has shown resilience overall, but growth in developed economies is significantly slowing down and the monetary policy remains tight. So, against this backdrop, given the Russian-Ukraine war and the realistic projects overseas, especially the commercial realistic projects, has entailed a lot of risks. So, there is a spillover effect of domestic developers. So, these reasons combined, the asset quality of the banks' overseas institutions has declined to a certain extent.
As of the end of June, NPL ratio was 1.21%, 0.04 percentage points over the beginning of the year. And compared with domestic market, we have different means to resolve NPL overseas, so it requires some time. However, if we look at the general trend, we expect the NPL ratio is under pressure for overseas institutions, but generally speaking, it will be stable. So, for the second half, we believe new initiatives will be issued to stabilize the economy, to unleash the potential of consumption. So, against this backdrop, the bank will continue to place greater importance on proactively preventing and resolving systemic financial risks.
So, first, we will implement the national deployment and take multiple measures to effectively prevent and resolve risks in key areas, such as real estate and local government debt. Secondly, we will continue to deepen and improve our comprehensive risk management system, enhance our risk management capabilities. And for some major risk factors, we will set up lines of defense and establish a blocking mechanism for various types of risk transmission. Thirdly, we will continue to carry out a multidisciplinary and multidimensional risk investigation for overseas institutions. We have very specific strategies in place, and we have strengthened our requirement for managing risks in key areas.
For example, we'll focus on potential risks in the real estate sectors overseas, have limit control and revolving inspections. And we will focus on key clients and also step up our resolution efforts, in particular resolution efforts in advance, so as to ensure the quality is stable overseas. And number four, we'll focus on the key risk points and to eliminate the potential hazards. We will also strengthen resolution efforts and have more channels for resolution, for example, for retail assets. We will keep the NPR ratio for retail business at a low level.
Fifth, we will accurately reflect the quality of our assets, continue to implement the relevant requirements of the new classification rules, fully assess risks in key areas, make prudent provisions, and continue to enhance our risk resilience. In the first half of the year, the loans to emerging industries, manufacturing, and green sectors has been growing very well. And in the second half, we will provide more loans to SMEs, rural revitalization, and green development, so as to lay a solid foundation for high-quality development of the group. So overall, we have every confidence to maintain the high quality of the group's assets and to stabilize the credit cost. Thank you.
[Interpreted]. Thank you, Director Liu Jiandong. For the interest of time, we have the last question opportunity for analysts in the venue. Thank you.
[Interpreted]. I'm from China Securities. So my question is for President Liu, and my question is about globalized operation, which is the most distinctive characteristic of BOC. So may I ask you to share with you the development strategy of overseas business in the next stage, how to balance the development and security of business at home and abroad? Also, we're interested in internationalization of RMB. So what's the latest progress of BOC in this respect? Thank you.
[Interpreted] Globalized operation is a most distinctive characteristic of BOC. So President Liu will take your question.
[Interpreted] Thank you for your question. So I have taken a lot of questions on globalized operation. Indeed, it is one of the features of BOC. And I think overseas business development is one of our priorities. Since the beginning of the year, Chinese leaders have been closely engaged with the world and brought new challenges to the world. Closely engaged with the world and brought new changes and opportunities for international economic and trade cooperation.
So as a century-old company with a globalization gene, BOC will continue to grasp the historical opportunity of China's accelerated construction of a new development pattern of dual cycle circulation and high-level opening up to the outside world and continue to consolidate our distinctive advantages, make new contribution to the country's overall situation.
First, we'll continue to enhance the level of globalized financial services and serve the overall strategy of the country. We will continue to participate in the construction of the Belt and Road, RCEP, the Guangdong, Hong Kong, and Macau Bay Area, the Western Land and Sea Corridor, the Free Trade Zone, et cetera. So we will have a one-point access global response and comprehensive service, continue to improve the integrated service capacity for domestic and foreign customers. We will better serve CIIE, the Canton Fair, and the CIFTIS and other major exhibitions. BOC is the strategic cooperator or partner of these important events.
And also, we will focus on key areas such as crowd-bought tourism, study abroad, business recovery, cross-border e-commerce, electric vehicles, et cetera, and to support the high-quality development of trade. And in June this year, we opened a representative in Papua New Guinea, which is the first branch in Southern Pacific Ocean, further optimizing the layout of our global network. And as allowed by the regulator, we will upgrade it to an operation entity so as to make new contribution to our overseas operation. And the LIAD branch in Saudi Arabia will be open very soon, which will make further contribution to our global presence.
Second, we'll continue to enhance the level of risk compliance and control in-line with the development of globalized business. Just now, in your question, you have particularly asked how to balance security and development overseas. So given the complex international situation, BOC will shoulder a strong sense of responsibility and strictly follow international practice, and the local laws and regulations of the host country continue to strengthen compliance risk management and to strengthen systematic management of conventional and non-conventional risks and integrate risk management into our entire operation and management.
We'll continue to strengthen country risk management and asset and liabilities management, formulate effective and feasible contingency plans to ensure the assets and liquidity security of our overseas business. And your second question is about the internationalization of RMB. What's BOC's plan? So we have expanded our circle of friends with the help of our global organization. We have made a lot of contribution in this respect. It's fair to say that BOC is a leader in the internationalization of RMB. So we have institutions in 63 countries and regions outside China, and more than 80 percent of them have opened RMB business.
In recent years, the bank is expanding its RMB business to more emerging markets. For example, in the first half of this year, Argentina announced its support for the adoption of RMB. So Bank of China quickly handled cross-border RMB settlement, which became the first batch of business in the industry. And as China further opens its financial sector, RMB assets has become more attractive to global investors, and its advantage in global asset allocation has become more obvious.
BOC has continued to enrich our product offerings, and we offer comprehensive services such as bond investment, hedging, and custodian services. And in-line with national diplomatic strategy, the bank has actively promoted inclusion of RMB assets in the foreign exchange reserves of most countries. So this has helped us expand the circle of friends for RMB use.
And the third is to promote cross-border RMB settlement business. We have introduced a series of facilitation measures such as simplifying the review process of customer documents and e-service channels. In the first half of the year, domestic branches handled a cross-border RMB settlement volume of nearly RMB 6 trillion, and the group handled a cross-border RMB clearing volume of more than RMB 370 trillion, maintaining its leading market share.
And fourth, it helps to improve the infrastructure for global RMB circulation. At present, we have 13 overseas institutions which are designated RMB clearing banks. They have played the role of serving foreign entities and cultivating offshore RMB market. We also fully support the construction and promotion of SIPs. Twenty-seven institutions, including the head office, have become direct participants in the SIPs system. We have attracted nearly 630 banks to access the SIPs through the BOC system. And it helps to ensure the smooth circulation of RMB globally through the convenient and efficient clearing services.
So in the future, BOC will continue to give full play to its advantages in globalized operation, steadily promote de-internationalization of RMB, realize its own high-quality development in high-quality services, in deepening reform and expanding opening up, and continue to contribute its financial strength to the construction of a new pattern of dual circulation. Thank you.
[Interpreted]. And before the meeting, we announced a call for questions from all investors. And the above questions also responded to the more focused concerns of the feedback. Due to time constraint, the first half of the Q&A session will end for now. If you have any further questions or inquiries, you may contact our colleagues in the bank's investor relations team after the meeting.
Now I would like to hand over to Mr. Jia Tianbin, Spokesperson and Director of the Office of Bank of China, to moderate the Q&A session from medias.
[Interpreted]. Thank you, Madam Yu Ke. Autumn is the season of harvest. I would like to thank the press for coming to BOC to attend the interim results release. Just now the investors and analysts have raised a couple of questions around markets and investments. I believe that the friends from the press have also brought with you a lot of questions that the customers and the society are interested in.
Now let's move on for the Q&A session for the media. I would like to remind you that before raising your questions, please identify yourself and your affiliation. Okay, now we're open for questions. The lady at the center row, on the first row, please.
[Interpreted]. I'm from 21st Century Economic News. So now the deposit rate has been cut. Will it have an impact on our deposit business and the liability structure of the bank? Will it have an impact on deposit growth and the trend in the second half of the year?
[Interpreted].Thank you for your question. We have dynamically adjusted our deposit rate policy. President Zhang Yi will talk about this question.
[Interpreted] Yes, thank you for giving your interest in deposit business. Deposit business is an important manifestation of our comprehensive financial service capability to the customers. We focus both on the quality and the pricing. We want to provide high-quality development to expand customer base from the source, build more high-quality scenarios, to expand our service portfolio to be more precise and targeted in delivering services, to achieve a higher quality development, better serve the real economy.
Now the saving deposit interest rate has been cut twice in the first half of the year. Of course, on the one hand, it can help the bank to continuously improve the deposit structure, reduce the cost of deposits, especially the cost of medium and long-term deposits, push down the interest payment, and also it can help us undertake responsibility as a large state-owned bank, reduce and stabilize the financing cost of the real economy.
In the first half of the year, the balance of customer deposits of the bank was RMB 22.4 trillion, an increase of RMB 2.24 trillion over the beginning of the year, or 11.1%, higher than the increase of loans, which is 9.8%, by 1.3 percentage points. Its share in the liability increased by 2.3 percentage points, with improvement in the liability structure. Domestic RMB customer deposits amounted to RMB 17.4 trillion, an increase of 11.5%, which is higher than the increase in deposits of the whole society, because M2 increased by 11.3% year-on-year.
An increase in loans of the bank is 9.5%. The deposit interest rate payment decreased by 4 basis points compared with the previous year, the most incomparable peers. So, this helped us better realize the synergistic development targets of controlling both volume and price. Looking ahead, in the second half of the year, with the steady progress of regulatory policies, the gradual recovery of market demand, and the expectation of continued improvement in economic operations, it is expected that deposits from the whole society will still maintain a relatively fast growth rate, and the bank's annual deposit growth is expected to be higher than that of the previous year, setting a historical record.
Regarding the regularization of deposits, the economic recovery is going to be a gradual process. Currently, consumer consumption is yet to be restored. The willingness of the private investment is yet to improve. And many of the funds from the industrial and commercial enterprises are being deposited with longer terms. But compared with the first half of the year, the second half of the year would see a better performance here. We will build a closed-loop flow of funds and, through scenario construction, expand key products such as cash management, payroll services, custody services, and faster payment services, improve customer service capability, increase the retention of funds by making a larger flow.
[Interpreted].Okay, second question. On the third row, the gentleman in the middle.
[Interpreted]. Thank you. I'm from CCTV. I'm a journalist, Wang Wei. I want to talk about the revitalization of the private sector. I noticed that there was a 16.42% growth of loans granted to private sector. I want to know the priority areas of your lending and any plan for the second half of the year. Thank you for your attention paid to this.
[Interpreted]. So, basically, we are removing the bottlenecks of access to financing channels by the private sector. We are enriching the product portfolio. I want to invite Vice President Zhang Xiaodong to give you an answer.
[Interpreted] Thank you very much for your question. We adhere to the implementation of two unwavering principles to leverage our globalization strength, integrated service strength, innovate proactively the service channels and means to deliver services to private entrepreneurs, enhance our KPI system, perform our duties in accordance with the laws and regulations, optimize the credit granting policies, better allocate the resources, first, increased credit support for private enterprises by expanding the total volume and the lowering efforts.
By the end of June, the balance of loans to private enterprises increased by RMB 480.7 billion compared with the end of the previous year, an additional RMB 174.7 billion year-on-year, a growth of 16%. The share of loans to private enterprises in new corporate loans increased from 40% in 2020 to 42.37%. Continue to expand the credit coverage of private enterprises. At the end of June, the total number of private enterprise credit customers served by the bank reached more than 1.15 million, an increase of 11.55%. The weighted average interest rate of newly placed private enterprise loans from January to June 2023 dropped by 27 BP compared with that of 2020.
We also promoted and built the platforms to help private enterprises to have a global footprint. At the end of June, we supported 59 overseas investment and financing projects by private enterprises covering 21 countries and regions. We also provided better cross-border matching services. We organized 110 matchmaking events globally with the participation of more than 50,000 enterprises from 126 countries and regions, effectively utilized the advantages of the main channel bank for cross-border trade, supported private enterprises in expanding foreign footprint, thirdly, expand channels and pooled efforts to increase direct financing to private enterprises, maintained rapid growth in the volume of private enterprise bond insurance and investment business, and utilized the synergistic advantages of investment banking plus merchant banking, supported high-quality private enterprises to develop and grow by taking advantage of opportunities arising from the reform of the full registration system of the capital market.
Fourthly, build a system-strengthened services focused on supporting private enterprises to enhance their science and technology innovation capabilities. By the end of June, provided about 1.5 trillion credit line to support 61,000 high-tech enterprises. Balance of loans to high-tech enterprises accounted for a great proportion of domestic public loans and also among the top compared with our industry peers. Build an all-around financial services for science and technology companies, provided comprehensive financial support such as equity investment, bond investment amounting to more than RMB 500 billion.
Launched special products such as innovation loans, intellectual property pledge financing and option loans, supported private companies in R&D. Fifthly, push forward transformation took on more roles and responsibilities, increased credit support for small and micro enterprises. By the end of June, the balance of inclusive loans to small micro enterprises was RMB 1.55 trillion, an increase of RMB 322.6 billion from the end of previous year, a growth rate of 26.27%.
The number of borrowers amounted to 896,000, an increase of 148,000 from the end of the previous year, a growth of 19.88%. Accelerated the digital transformation of our system. By the end of June, inclusive online loans reached around, increased by 77.91%, improved the Huirong BOC in enterprise platform, became a comprehensive information service platform that integrated the functions of band and government linkage, event management, supply and demand matchmaking.
By the end of June, issued more than RMB 120 billion in special loans for job stabilization and creation to 27,000 clients. Sixth, strengthen the foundation and institution, improved the KPI system, reviewed and improved the examination and approval system. Going forward, we will continue to uphold the principle of more proactive attitude, more attentive service, more efficient action and more favorable pricing to provide a higher quality and more efficient financial services to private enterprises.
First, build a long-term mechanism to better serve private sector, refine the specific measures to cover more private companies, continue to be more professional in delivering services. Secondly, provide more credit support to the private sector to reduce the financing costs and improve their satisfaction. Thirdly, further bring into play our globalization service advantages, continue to stabilize foreign trade as important means in serving these companies, help these companies expand their global footprint, strengthen the global supply chain. Fourth, further give full play to our comprehensive business characteristics to meet the various financial needs of the private companies.
[Interpreted]. Now we can take another question. The lady in the middle, in black, please.
[Interpreted]. I'm from China Banking and Insurance newspaper. I want to know that what are the achievements of BOC in terms of IT innovation and digital transformation in the first half of the year? What are the next steps? How do you empower business operation and development? Thank you.
[Interpreted]. I want to… We actually have one leader who didn't answer a question so far. So we give high attention to digital transformation. And I want to invite Mr. Cai Zhao, the expert of IT, to answer your question.
[Interpreted]. Thank you for your question. In the first half of the year, Bank of China actively integrated into the construction of digital China, stepped up the digital transformation of itself, and adhered to scientific and technological innovation, insisted on the access, convenience, and facilitation of digitization. We did three things in the first half of the year.
First, we built the so-called Oasis Project to consolidate the foundation of digital transformation and also built the private proprietary cloud system. And we launched several systems, like the payment system. The enterprise-level architecture construction was launched for 23 online application components, including settlement, payment, debit card, credit card, et cetera. Daily transaction volume could be 2 billion. TPS is more than 20,000, laying a solid foundation for the healthy, stable development of our businesses.
Second, based on the use of data, we improved our digital management capabilities. We have built the database of the so-called Lake Warehouse, and now the data asset accounts for 33 tetrapods. We also built a unified data dictionary, and also the data vertical and horizontal platform provides 169 visualized data products. And for the whole bank, we have 240,000 users of the system, promoting greater development and inform the decision-making process. We have improved the data application scenarios to better share the data and to fully utilize the value of the data.
And third, we have better improved our capability to serve the customers with data. We have a new version of the app, which is more smooth and more useful. And we have over 81 DAUs. And also, we have the inclusive digital development, and the Hui Ru RMB app has become widely used. And 80% of the new loans are online, and the cross-border purchase app has been widely used. And the registered user exceeded 10 million.
We have developed our privacy computing platform, and we have consolidated the public data resources to enable consumer finance business. As the next steps, BOC will continue to consolidate our foundation to benefit the general public and to prevent risks in our IT work. And we will further empower high-quality development of the business. We will do things in five aspects. First, phase one of the OASIS project to build the enterprise-level framework and its application across the group, and to build the computing power infrastructure. And a private cloud center will be put into use, so as to provide strong underlying support.
Second, FinTech will empower our global business development. We will introduce the version 6.0 of overseas business, and the IGB platform will have full coverage for overseas institutions, so as to enable overseas institutions for global operation to serve high-quality development. And third, accelerate digital transformation and improve smart service to support innovation, inclusive finance, green finance, and to attract more customers, so that we can better serve the real economy. And to prevent and mitigate systemic financial risks, we'll make use of machine learning, natural language processing, and other advanced technologies to have better early warning, smart review, precision decision-making, and to make the models more accurate, so as to ensure security of people's money.
And number five, we'll take an integrated approach in improving the IT system, enhance collaborative innovation with external partners, so as to empower high-quality development of the bank. Thank you.
[Interpreted].For the interest of time, last question for today. So this gentleman, please.
[Interpreted]. Thank you, Mr. Jia. I'm from Phoenix TV. It's a pleasure to raise the last question. My question is about inclusive finance. So what work has BOC done in support SMEs, and what other steps will you take to enable SME financing in the future? Thank you.
[Interpreted]. SMEs are the pillar of China's economy, and it is an important customer segment for us. So Mr. Xiaodong will answer this question.
[Interpreted] Thank you. Since the beginning of this year, our bank has implemented the decision of the central government to stabilize growth, employment, and prices. We make efforts to improve the quality of financial services for SMEs and promote the recovery of the sector. First, inclusive loans have increased both volume and scope. As of the end of June, the balance of SME loans amounted to $1.5 trillion, an increase of 40 percent year-on-year. And we serve nearly 900,000 customers, an increase of 150,000 compared with the beginning of the year.
Second, we make efforts to stabilize employment and benefit people's lives. We have benefited 1.4 million workers with our efforts and introduced specific plans to support the new citizens in their employment and startup activities, entrepreneurial activities. And third, we enhance our support for enterprises with special features. And the balance of loans to those special enterprises exceeded RMB 250 billion, which is a leading figure in the industry.
We support independent innovation as of the end of June. The intellectual property pledge financing balance is RMB 22 billion, so we support specialized industry clusters, advanced manufacturing clusters, and key enterprises. As of the end of June, we have carried out 214 theme events. More than 7,500 SMEs participated in the events. And as next steps, we'll continue to participate in activities organized by five ministries and continue to provide stronger financing support for them.
First, around the manufacturing industry, high-tech, and bottleneck industries, we will work with other industries to introduce a batch of marketing activities to increase financial support for key industrial chain. And second, for specialized enterprises, leading enterprises, advanced manufacturers, and SMEs, we will develop targeted financial service plans, improve our integrated service involving commercial and investment bank so that SMEs have more access to our financing.
And third, in terms of non-financial services, we will enable and empower SMEs on the supply chain, and we will facilitate them to engage in trade cooperation exchanges and provide financing and policy training for them so that they become more familiar with bank policies and our products. And number four, we will introduce special policies on pricing, authorization, enterprise evaluation, off-site credit, and et cetera.
[Interpreted]. Thank you, Vice President Zhang. For the interest of time, we will close the Q&A session.
You are welcome to raise questions through our official website and WeChat account. Welcome to check our results and keep in contact with us. That wraps up today's interim results release. Thank you very much again for your interest in and support for the bank. Thank you.