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[Audio Gap] to the 2018 -- CITIC's release of operating results of 2018 first half of this year. And because we have the foreign analysts, we have arranged simultaneous interpretation. Our reports have already been published on our official website, so you can go there and download all of the reports.
And we have -- present here today, we have CFO and Vice President, Mr. Fang Heying; CRO Yao Ming; and also we have directors from the Chief Accounting Department, Asset Liability Department, Risk Management Department, Credit Management Department, Compliance Department, Corporation Banking Department, Investment Banking Department, Retail Investment, Personal Credit, Credit Card, Financial Market, Interbanking Asset Management departments. And we also have directors from Baidu CITIC Bank.
According to the agenda, first of all, I'm going to tell you about the operating results of the first half of this year. And my presentation is divided into 3 parts.
And in the first half of the year, we have stabilized our growth, and we have seized the opportunities and also tried to increase the quality of our growth. ROA and ROE have improved. Our net operating income have increased, and NIM has increased as well. Our credit risk has been released. And we have basically reached all of our goals, and we are going to talk about the financial indicators later.
And first of all, I will talk about the overview of the results of the first half of this year. And second, I will talk about implementation of the strategy. And the final part, I will talk about the outlook and policy.
And first, I will talk about the overview of the results. ROA and ROE have improved, and this has generated a good return to the shareholders. Our ROA was 0.92% in the first half of this year, a 0.08 percentage point year-on-year. And ROE was 13.96%, up to 0.2% point year-on-year.
Our net profit grew at a faster pace. We have generated RMB 25.72 billion of net profit attributable to the shareholders of the bank. Profits before provision is RMB 88 billion, and that is a very high increase. And this is a -- also representing a 5.53% increase.
And net operating income is RMB 81 billion, up 5.85%. And net interest margin picked up remarkably. Net interest margin is -- was 1.89%, and this is up 0.12 percentage points year-on-year. We have changed our structure, and our net interest margin has bottomed out. But I want you to know that the deposits overall has slowed down its growth. And in the future, we are going to see more pressure on NIM.
And we have focused on our profit, and we try to realize -- and transformation. And the ratio of noninterest income has increased to 38.55%, up 3 percentage point year-on-year. Asset quality was further enhanced with the credit risk released faster. According to the new policies and regulations, all of the balance of loans overdue for 90 days have been included in our NPL. If you look at NPL, NPL ratio is 1.8%, which is 0.12 percentage point higher than last year's. And if you look at the balanced ratio and ratio of loans overdue for 90 days and above, the ratio is -- the loans overdue for 90 days and above to NPL is 93.92%, lower than last year's 109%. And all of this have complied with the new rules and regulations.
We have also realized the growth in size to meet our expectation. Our total asset has realized 5,800 billion, up 2.3% from the end of 2017. And we also have seen many growth of -- from the customer loans, especially if you look at the personal loans, it has increased by 5.2% compared to the end of last year.
And we have tried to strengthen our efforts to develop institutional customers. And we have more corporate customers this year, and we have consolidated our clientele base. And we have worked with China Mobile, [ Ba-eke Group ] and Alibaba. We tried to strengthen and centralize the marketing towards strategic customers and deepen comprehensive cooperation with a number of strategic customers. And we also tried to work with the government in order to enhance the new type government-bank partnership.
At the end of June, the bank had 76,800 small and micro businesses loans customer, up 14.98% from the end of last year. Retail customer base kept growing fast. And by the end of June, we have about 80 million individual customers, and we have about 651,000 VIP retail customers till the end of June. That is a 16% growth from the end of last year.
And we also have accelerated private banking development. The bank had about 30,674 personal banking customers at the end of June. We have also continued to strengthen a collaboration mechanism with corporate and retail banking. Now we have added another 3,000 high-end retail customers.
And now I'd like to move on to the implementation of strategy. First, we have pushing -- we have been pushing forward the differentiated regional development program. The bank implemented the differentiated regional development strategy. Branches were divided into strategic branches, 6 of them, and we have key -- 16 key regional branches and 16 emerging regional branches with varied development positioning. And strategic branches and the credit card steadily improved their resource input and output contribution.
Strategic branches and the credit card contributed 63% of the net operating income on the first -- in the first half of this year, and 42.3% for strategic branches and 21.3% for credit card. So overall, there is a 5.2 percentage point growth year-on-year. At the end of June, strategic branches contributed 53% of the deposits, 1.6 percentage points higher than the end of last year, and 40.5% of the loans, up 1.6 percentage points from the end of last year.
Net operating income from corporate income was RMB 43 billion, accounting for 53% of the bank's total net operating income. Investment banking showed distinctive characteristics. For the first half of the year, the bank has underwritten RMB 173 billion of financing instruments in the market, and we also have completed a number of influential M&A projects.
International payments topped joint stock banks. Forex purchase and sales in the first half reached USD 74 billion, and this placed us -- we are -- placed us at the fifth in the domestic bank and the first among the joint stock banks. International forex receipts and payments amounted to USD 138 billion. Transaction banking strategy gained pace in its implementation. The bank had [ 406 -- 700 -- 1,000 ] transaction banking customers. The bank had 3,942 effective auto finance dealer partners.
And if you look at the retail banking, and the retail banking has also contributed more to the net operating income, and it was RMB 28.13 billion, representing 34% of the bank's total net operating income. And asset under management has expanded to a new high, which make us rank the third by balance and the second by annual increment among joint stock banks. And we also have seen the balance of personal deposits growing to RMB 657 billion, 23.2% increase through the end of last year.
Credit card results also grew rapidly. Credit card transaction amounted to RMB 961 billion, up 45%. Income from credit card business was RMB 23 billion, up 40.5% year-on-year. E-banking also become more competitive. And now we have about 31 million mobile banking customers, 16.2% up from the end of last year.
We also have a lot of customers who are going overseas. The total number of overseas finance customer exceeds 5 million with assets under management balance of RMB 636 billion, and we also have [ xingxing bao ] grow to RMB 132 billion. The bank stepped up transformation of financial market business and steadily improved its market competitiveness. First, let's take a look at the market making. ForEx market-making transaction volume stood at 0.65 trillion in the first half of this year, which makes us among the top of the few players in the interbank forex market making.
We also have been improving interbank business. If you look at the first half of the year, the interbank plus platform had 1,011 financial institution subscribers, up 24% of the end of last year. The balance of notes assets was RMB 285.6 billion, and electronic notes business accounted for 99.6% of the total custody business gained a bigger market share. Assets under custody reached RMB 8,560 billion, up 6.27% since of last year. Asset management transformation made solid progress. At the end of June, the balance of wealth management products issued by the bank was RMB 1,291 billion, up 8.4% from the end of last year. The return to customer is RMB 27 billion, up 36% year-on-year.
Net asset value-based product took up a higher percentage in the market. We have also seen a better result from the subsidiaries. And you can see that net profit attributable to shareholders for bank has grown by -- grew by 4.7%. And we actually diluted some of the shareholders' shares because of CITIC international has new operation. And you can see that the subsidiaries have realized about RMB 4.7 billion of profit.
And the -- and also for them, the NPL has decreased by 0.77 -- 0.47%, and we have finished the delivery of shares in Kazakhstan's Altyn Bank, and this will make contribution to the building of sustainable and [ weiwing ] investment of financing system. Under the "Belt and Road" initiative at Citic, Baidu Bank developed strength in internet plus finance. And now, we have about 3.94 million users in CITIC's I Bank, and we continue to set up overseas branches, including Hong Kong, London and Sydney as a part of efforts to further implement our internationalization strategy. In the first half of this year, fintech has become a break-through point for our further development. First, we accelerate transformation to open and distributed architecture, the core system decentralization progressed as planned. Pre-applications development platforms were developed in-house. Data warehouse plus big data platform supported nearly 80 applications. Second, within the CITIC brand, the bank built AI application platform, such as data loading, algorithm, model, training and model deployment. The bank made explorations for innovation in applications, including intelligent risk controls, intelligent operations, et cetera.
We promote start retail marketing. The bank launched the [ aya ]marketing platform project and established a system of retail customer labeling and customer value evaluation. Number 4, we promote implementation of the mobile finance strategy. We improved our mobile ecosystem for finance plus nonfinance ecosystem. Mobile banking is upgrading from a transaction forward to an operating platform. Our technologies were applied to display effective demand products to customers in an effort to provide more considerable and heartwarming mobile banking services. [ Over ] 80 million users follow the bank's new media accounts for credit card.
We fill implementation of the transaction bank and strategy, the bank [ restructure ] the technical support system for transaction banking and organically integrated customers, product and channels to provide one-stop services to customers. And the third part is outlook and policy. New challenges and opportunities in the ongoing transformation of deployment are faced by a bank first escalated U.S. China trade war adds to external uncertainties. In the short run, exports, GDP growth and exchange rate are affected adversely. Higher financial market volatility poses peak uncertainties to banking activities. In the long run, the industry upgrade might be delayed. The extension to the top end of the industry chain will be hindered and the shift to new engines of economic growth remains a long-term arduous mission.
Second, financial deleveraging will continue to have its impact. Slow M2 growth and slowdown in aggregate financing are accompanied by weaker deposit growth.
Market price founts remain high overall in the market-based interest rate environment, market based line but it does takes up a larger share and commercial banks feel the pressure in liquidity management, asset allocation and liability costs.
Third, domestic credit risk has entered a new sensitive period. Large corporations show the problems of excessive financing from many lenders and the liquidity drought. Bond market defaults occur frequently, which coincides with the peak time of debt maturities. Credit risk is growing in the market. Commercial banks remain under asset quality stress. Strengthened risk mitigation challenges profit growth.
Number four, frequent new regulatory policies test banks' professionalism. The new liquidity rules knit asset management rules and large exposure regulations were issued successively. The market kiosk crackdown has gone deeper, conducive to help banking development back on to the normal track in the short term while posing certain pressure on the transformation of banking development in the short run.
Commercial banks must be more forward looking in policy and trend, all faced with challenges. We've also noted many new opportunities in the ongoing transformation of development. We need to seize these opportunities.
First, the prudent and neutral monetary policy provides a positive liquidity outlook. The central bank's monetary policy is neutral to ensure reasonable, ample liquidity, thereby guiding money supply, credit and aggregate financing toward moderate growth, targeted reserve requirement ratio cuts, ease banks' liquidity pressure with further cuts still expected, expanded the scope of collateral for MLF has stabilized market confidence and driven economic growth and more evidence of pursuant steady growth.
The fiscal policy is more proactive with faster spending growth, and a further improved structure. Banks are encouraged to increase credit extension actively to both inclusive financing, improve the quality and efficiency of financial services in serving the frail economy. Both the issuance and use of local government special bonds have been accelerated.
Number three, regulators pay great attention to intensity and pace control. New regulatory policies place more emphasis on intensity and pace to avoid risk triggered by policy overlap. The new asset management rules allow a longer transitional period. The supplementary rules and detailed regulatory rules for banks' wealth management exposure draft provide a buffer for smooth transition. New liquidity rules relax the standard moderately.
Regulators bring discipline to competition and strengthen money market fount supervision in home division of money market fount sales and advertising restricted T plus 0 redemption of money market funds have reduced the deposit runoff to money market funds to some degree.
In the second half of the year, we will focus on the following areas: We will seize opportunities during expansion of 45 foundations during contraction uphold the strategy's focus on key areas, stay true to the founding mission and pursue innovation, [ driving forward ] development. We will grow deposits to improve customer management.
Second, we want to control NFLs (sic) [ NPLs ] and cement asset quality. We'll further build systems and mechanisms implement the customer-wide list and the full category management, adjust the corporate banking structure and manage risks in a proactive manner. We will change the credit extension methods for differentiation and diversification, strengthen risk provision and control in key areas and strictly control the increase in new NPLs.
Number three, we will enhance compliance and prevent and mitigate risks. We understand policies accurately embed regulatory environments into corporate policies, strengthen policy communication and implementation and conduct the strict inspections of real estate in debt governance and money laundering.
Number four, we want to pursue innovation to drive future development. We'll vigorously promote fintech applications, step up efforts to make innovative break-throughs in products and establish cross-border business model. We will set up the fintech innovation founts and innovation incentive fund to step up the introduction and the cultivation of fintech talent and encourage the application of advances in innovation.
So, so much for the results of the first half of the year. I spelled out our plans for the second half of the year. 2018 marks the inception of our new strategy. We owe the achievements to our clients and investors as well as the trust of the Board of Directors. We will continue to follow on the strategy and consolidate our business to pursue growth of higher quality to follow through on our 3-year plan strategy. So much for my presentation. Thank you.
Now we will have a Q&A session. [Operator Instructions] First caller, please?
From Deutsche Bank.
I have 2 questions. First, at the strategic level last year, CITIC raised the 2018 to 2020 development strategy. Could you shed more light on the implementation of the new strategy? And second, at the corporate level, could you sum up the highlights? Second, NIM. In Q2, the NIM maintained momentum of growth. Could you share with us your outlook on NIM?
Thank you for your question. First question regarding the implementation of our strategy. Like you said, last year, we formulated the '18 to '20, the 3-year strategic plan. At the results release meeting at the beginning of the year, our Chairman spent lots of time talking about the strategy. Looking back on the past 6 months, in the space of the 6 months in the implementation of the strategy, we did lots of work. And I'd like to report to you on this front. The overall strategy implementation informed the whole process of our business and operation. The following areas were the highlights and key areas. First, we considered and formulated 8 tasks for strategy implementation, including 100 key project. It's called 8-1-0-0 program: the 8 tasks plus the 100 projects. And at a recent on sub-presidents meeting, the presidents of the headquarters and branches received mission statements from our Chairman. The second work, in the first half of the year, we launched our business transition and asset management transition. Our corporate banking had 1 body and 2 wins. And this is also an advantaged business. But our corporate banking on feet showed heavy assets. So we emphasized light but strong, which is the direction of our transition. And for asset management business, with reference to the new regulations for asset management, we did some adjustment. Number three, the strategic resources are concentrating in key areas and businesses. We regarded Beijing, Shanghai, Guangzhou, Shenzhen, Xi'an and Nanjing as key areas. Take credit resources as an example. 135% of the credit resources went to these key areas. And credit disbursement accounted for 42% of the total. Number four, we prioritized customer base development. In terms of KPI and resources allocation, we placed unprecedented emphasis on this work. At the same time, from what we have observed, the headquarters for our branches or subbranches, especially with the heads and customer managers of subbranches, they have shifted their focus to the development of the customer base. I will share with you some of the figures later. Number five, we promoted risk management system development and strengthened risk prevention control and mitigation, more specifically in 3 areas. First, for start, risky loans, including on special mention and NPL, we accelerated disposal. And second, for stock credit, we implemented 4-tiered management. Third, for increased credit, we implemented wide-lift mechanism. Now through these measures, our risk prevention control and mitigation have come a long way. Last but not least, our input in technology development has accelerated. First, in terms of financial input. On the back of annual 2.7 billion input in technology, we earmarked 1% of our profits as additional input. Second, we are setting up IT innovation fund of tens of millions of RMB. And three, we have established innovation lab. Number four, we put forward the idea to step up input in human resources. In the next 3 years, we will increase 500 places for IT staff, which will be broken down by HR and the Department of Technology. We have implemented the 8 IT transition project. So these are the 6 areas of our main work. Over the course of the implementation of the new strategy, from my point of view, we feel that, in terms of development layout and measures, CITIC has undergone 4 major changes. First, our operational strategy has increased its initiative, targeted-ness and perspective. And for the over-regulation landscape and interest trends and forecast, we have improved our strength and grasp with increased clarity. And also, secondly, I think our work has become more systematic. We no longer only look at the single task in a single year. The technological investment or strategic transformation [ are ] our 8-1-0-0 project, and everything has become more systematic. Thirdly, we not only look at the problems or issues we need to look -- resolve today, we are more forward looking. And fourthly, we have improved quality. If you look at the operating quality and the overall increased quality can be seen in several aspects. And there are 8 highlights last year. And this year, we have summarized the highlights as well, and I would like to share with our investors. First, I'm not going to bore you with the numbers because Mr. Lu has already briefed you on all the numbers. So first, our profit has realized the best growth in the past 5 years. Shareholders are getting a higher return, and net profit income has increased, and ROE is about 14% and 0.2 percentage points year-on-year growth. And if you look at the retail banking and other sectors of the bank, all of these achievements are direct results of our exploitation of the market and our good risk management and cost management. And also, we have realized growth of asset. But at the same time, we have increased the effectiveness of use of asset. We shrink our balance sheet ahead of the industry. Until the end of last year, we have seen a decline of the size of the balance sheet. That is because of the interest rate in the market and also new policies and regulations from the regulators. And this year, we used the -- we have managed the liquidity, the stock and the increments. So the stock operating, we try to optimize our businesses. And in terms of liquidity management, we try to increase the efficiency of the turnover of the assets. We have optimized the mix of the asset and coordinate among writeoffs, newly assets, credits and other credit assets. So overall, the efficiency of the asset have been increased, which has shown on ROA numbers. And also, we have seen some of achievements in our light transformation in the bank. And we have given out dividend of RMB 12 billion. But at the same time, if you look at the capital adequacy ratio and also the Tier 1, capital adequacy ratio is -- it is -- it have been improved. If you look at the Tier 1 CR, it is -- it should be -- it has gone down. But if you look at Tier 1 and the core Tier 1, the number have gone up. And also, the percentage of the noninterest income has increased. At the same time, we have improved our asset management. I'm not going to go into details now. And fourthly, as you probably can see on our balance sheet, NPL balance, the NPL ratio and bad loans, they have gone up in terms of the numbers and percentage. However, from the perspective of the management, we think that the quality of the assets have been improved. And the pressure of the bad quality assets have been released. And they are released in a very short period of time. And we have write off some of the loans in the first half of this year, and the writeoff is increased by 11.7 billion compared to last year, and so this is very good for the overall quality of the assets. Some of the loans are in mention -- special mention loans, but now they are included into the NPL and the loans past due for over 90% -- 90 days. And you see a 15% decrease compared to the level of last year. So to sum up, we think that our NPL number is more accurate, and we have a tightened risk control over NPL. The management knows this very well. We think this is a great improvement. These -- the fifth highlight is that we have consolidated our basic clientele, and we are deepening our collaboration with our customers. If you look at our corporate clients, we have more -- we have increased [ to ] 47,000 corporate banks -- corporate clients. And we have also added the personal clients and retail clients and high-end net worth individuals. And Mr. Lu has also said that our oversea financing [ Xing xing bao ] and international payment settlement and the market making in the interbanking market and auto finance and on all of these areas, CITIC is ranking high in the industry. So you can see a lot of the progress in our work. We have made a lot of efforts in technological investment. And we have seen initial results already. Our fintech, in terms of artificial intelligence, blockchain, cloud computing, we have established our presence in different technological areas. And if you're interested in, we can ask our technological experts or director to answer your question. For example, we have upgraded our mobile banking. We have about 4.44 million new mobile users in our bank, and this is a 63% increase compared to the same level of last year. And also, we have used data analysis and artificial intelligence to do targeted resale -- retail. And many of the targeted retail sales have contributed to this -- the 65% of our newly added businesses in this area. So these are -- so the 7 highlights of the CITIC Bank in the first half of 2018. Thank you. The second question -- the second question is about NIM. NIM in the first half of 2018 has increased or it has shown an upward trend. If we look at the overall year of 2018, NIM is 1.89%. So it's up 0.12 -- 12 percentage points. And if you look at the trajectory of NIM of the first half of 2018, we see there is an upward trend. And there are several reasons behind the increase of NIM. First of all, we have changed our asset liability structure, especially most of our resources are given to loans. And loans account for 56.6% of the total asset, and that is reflected in NIM. Secondly, last year, when we shrink our balance sheet, we tried to reduce the percentage of low-quality foreign currency loans. So if you look at the first half of this year, the interest rate of the foreign loans has increased by 20 basic points, and that also helped with the NIM. And the third reason is the market. And if you look at the cost of interbanking loans, you see that the cost has gone down, and that also helped the NIM to go up. If you look at 2018, the whole year, we think that, even though we have an upward trend, but still, we have to look at the market rate and also the monetary policy in the market. And if there are pressure for NIM in the second half of the year, usually it comes from the increasing cost of deposits. And two, growth has slowed down, so it's difficult to attract deposits in the Chinese society. But in terms of deposits, we still see a lot of great indicators. For example, China has been cleaning up P2P. And now we have new asset management rules and other rules. And all of these changes will have a positive impact on NIM. And right now, monetary policies are reasonable. We still have ample liquidity in the market. The government has been talking about the release of more credit into the market, and we are going to leaning towards individual loans in the future. And if you look at the interbanking businesses, we think that the interest will maintain in the second half of the year. If you look at the structured deposits among most of the banks, and the total number is about 10 trillion, but the structured deposits have already come down. And we think that this will continue to go down. And it is also related to our money fund and also asset management products. We think that structured products will continue to go down in the second half of the year. We think that NIM will -- might continue to go up.
Ran Xu from Morgan Stanley.
My name is Xu Ran. I'm from Morgan Stanley. First of all, I have 2 questions. The loans. Where would loans go to in the second half of this year? And we see a lot of signals encouraging banks to finance some of the projects. And so for the second half of this year, where will the credits go to? If you look at the bond interest rate have gone down, but the investment rate has actually gone up for the bonds. So for the loan interest rate and the investment interest rate, how would they be priced in the second half of 2018? If you look at the retail deposits, retail deposits have grown pretty good. So for the second half of this year, what are some of the strategies we are going to use? Are we going to copy some of the successful strategy from the first half of the year?
I'm going to try to answer your questions first. Thank you, Xu Ran. Xu Ran is a very old friend of ours, and thank you very much for attending all of our earnings call. The first question is about where the credit will go to and how are we going to position our resources. In terms of our assets, we are -- we have talked about the 4 strategies, and the first one is to be accountable. In order to respond to some of the national policies, as a joint stock bank, we are going to respond to the new policies rolled out by the government. We will actively promote inclusive finance and also support credit loans in the process of consumption upgrade. So that's the first thing. Second thing, in terms of corporate businesses. For the whole year, we don't have -- we didn't allocate very big number. It's about RMB 50 billion of growth earmarked for corporate businesses. And we are going to focus on several industries. The first one is infrastructure construction. We think that there will be opportunities in this sector in the second half of this year. The second is the 3 high areas. For example, the high technology and the high-tech medicine and so on. And the third area would be the private companies. In terms of bonds, we will increase our efforts in bond investing, considering the need of liquidity management as well as the high-yield uncontrollable risk of bond investing, including high investment grade on debt and debt product. In terms of interbank resources allocation, based on market landscape, we will focus on ABS and notes. For bond interest, in the second half of the year, the yield will drop. So the lending interest will drop slightly because we need to straighten out the fees through mechanism of the monetary policy. From monetary to market [ fix through ], there will be a backlog of 6 months. The lending interest rate will drop, but its impact on NIM will be minimal because the drop in deposit interest will hedge that trend. Now this is the first point. Second, the increase in deposits. Last year, our deposits saw a big drop. But this year, the trend has changed. Overall deposits reached RMB 359 million, an increase of 5.3% by structure. Frankly speaking, structural deposits take a lion's share. Our core deposits or general deposits didn't grow enough, but we can see that, among the deposit growth, there was a very good sign, which is to take structural deposits despite the big growth, but share in total deposits was only 10.58%, the lowest among the 8 joint stock banks. But this is the key in the work. Deposit costs were on the rise to 1.8%. For the second half of the year, we feel there are both upward and downward factors. There might be a slight growth or a slight drop. Both are probable, subject to market conditions. The themes with deposits are first, corporate deposits, we focus on chain-based marketing to attract to the fullest of fund, and we have tens of thousands of institutional deposits. So institutional clients are our key competitiveness. So each institutional client is a platform. It's unlike businesses. Of course, big businesses are also like platforms. We can on -- have lots of derivative businesses from these platforms. And for retail banking, through our retail system and the accumulation of customers, we make great contribution to the increase of retail deposits. In terms of deposits in the second half of the year, we expect deposits will increase to RMB 280 billion. Of course, we will also rely on debt issuance. And the week after next week, we will start the issuance of RMB 1 billion in debt. Apart from deposits and debts, we will also focus on a slow found operation, including ABS, among others, to contribute to our profits. So thank you.
From [indiscernible]
I have 2 questions, first regarding asset quality. The NPL rate has lowered from the report. So what is your outlook on the asset quality?
Sorry, the quality of the line was very poor. Could you improve that? Could you repeat your question? Please continue and be slow.
I have 2 questions. First regarding asset quality. From the results, we can see a very attractive tactic of the company is to reduce the NPL rate. So what is your outlook on the second half of the year's asset quality evolution? And could you look at the generation of the NPL and changes in provision policy? Second, the new regulations on asset management. With the new regulation out in the first half of the year, what is the impact on wealth management business? Have you done some estimates on the scale and income from the WMP business?
Our Risk Director, Mr. Yao, please. And second question for Mr. [ Di-quo ] from asset management department.
Hello, Mr. [ Chan ]. For your first question, this is a key question and difficult challenge for commercial banks in the past few years based on the asset quality figures shared just now. On president fund, also [ relating ] to the implementation of the new strategy for the 3 years, which also touched upon this topic. In the first half of the year, asset quality performance saw 2 rises: first, NPL rate; and second, NPL amount, the ratio and the amount. The 2 indicators are lagging indicators because there are distressed loans. So you may ask about the size in distressed loan ratio of CITIC. In the first half of the year, the executive of the headquarters were very determined in improving the quality of the assets. To consolidate our foundation, we made major adjustments. The reason for doing so includes to first, the overall results of CITIC have been good this year, so we have the capacity to deal with the problem. Second, from the view of the regulators, they are tightening the policy on asset quality. But in the first half of the year, we put all the loans that have been due for more than 90 days into the NPL basket. So this is for the first time, we lowered the ratio to 93.9%, lower than 100% for the first time. And according to the new accounting rules, we tried to expose the underlying NPL issues. We adjusted the RMB 28.2 billion of loans in normal category to an special mention category. Despite this move, we are lower than the average among 8 comparable joint stock banks. If we exclude this factor, we will be ranking #2 among the 8 peers. So in the first half of the year, we were very determined and made vigorous on actions.
Second, regarding the asset quality of the second half of the year and the generation of NPL and the provision policy, first, outlook on the second half of the year. Indeed, the size of assets has reached RMB 6 trillion. It is highly related to the macroeconomic landscape. In the past year, in terms of the exposure of our asset quality and risks, it is highly related to the macroeconomic situation. It is not down to major issues of our management. Of course, we cannot exclude the fact that we had to make improvements on some small issues. But overall, it is highly correlated with the macro picture. For the second half of the year, from our perspective, it is highly related to national economic transition and aligned with the economic trend. And from our view, there will be no problem that we can outperform the market because we did major adjustments in the first half and consolidated the foundation of the assets. Second, judging from the macroeconomic picture, we are at a very complicated time. On the one hand, China's economic transition has entered a deep water zone, or a relatively tough period. And second, it is also compounded by the trade war with the U.S., which brings huge uncertainties and probably China-U.S. trade war will generate some uncertainties. And the impact will be lagging because the trade frictions and trade war between China and United States only started since June and July and the real impact will only show in about 6 months' time. So for asset quality in the second half of the year, we won't be too pessimistic because we've had a very good foundation. But on the other hand, we mustn't be blindly optimistic given the overshadowed large picture. So for CITIC Bank, our asset quality in the second half of the year, I think it will be stable and controllable at a macro level. As for NPL generation, from our figures, we can see that the generation rate of NPL in the past few years has been running stable. Starting from 2014, with in-house response, it was 1.03. This year, it's 1.19. Despite the major adjustments, our generation rate still dropped by 0.26 percentage points as compared to the beginning of the year. So at least we will remain stable and avoid the big ups and downs. Second, we will also step up NPL disposal and treatment. In the first half of the year, our disposal efforts were very vigorous due to 2 reasons. First, we allocated big resources on to underwriting. Second, collection have been very effective in the first half of the year and lots of the aged debts were collected. And some of the underwritten NPLs were also recovered with a level higher than the past. So the disposal of the NPLs will also contribute to the NPL profile for the second half of the year. Speaking of the allowances or the provision, in the first half of this year, provision has gone down by 18%. And if you look at the 18% and break it down, the main reason behind this decline is that loans past due for over 90 days now have been moved to NPL. From the perspective of the regulator, they are very clear. They want all the banks to put the loans past due for over 90 days to NPL, but at the same time regulators understand that different banks have different capability to absorb the kind of changes, so they provided a grace period. For China CITIC, we have completed this move or this change in -- for the month of June. And that's why provision has gone down in the first half of this year, so even numerator and -- have already changed, and that's why you see the change in the ratio. And this change is very obvious and reasonable. If you look at quality of our changes, I think we can reach our overall target for this year. In terms of provision, if you look at operating revenue and our profit, we think -- we estimate a very stable growth. So we don't think there will be a very big change in the asset quality, so provision will remain stable for the second half of this year. It wouldn't be a big change compared to the first half of this year in terms of provision, so that's my answer. Thank you very much.
I'm going to answer the second question. In the first half of this year, because of the market environment and changes in policy, our wealth management product balance is stable. But even though our monthly amount has come down but the daily balance has increased. And our balance till the end of June is RMB 895 billion, which is a RMB 57 billion decrease or decline compared to last year. And our number is still much better than our peers because for our peers they have seen even a bigger decline in the WMP products. And -- but if you look at the daily average in WMP, the number has actually gone up. And because of the new policies and the market environment of this year, we have generated income from WMP RMB 600 million. And why there's a decline? First of all, the cost of MWP (sic) [ WMP ] has gone up in the first half of this year, especially from the beginning of the year to April and May, and the cost is about 4.9 and that is a 55 bps increase compared to last year's. And we have to pass this down to the customers, but we still manage to generate RMB 27 billion profit for our customers. And also, we have to -- we have realized a loss because we have to sell some of the management products on our balance sheet, and that's why there's a decline. And thirdly, because of the tax changes and also the new policies in asset management, it also impacted on our WMP products. We are going to follow the rules, and we want to be professional and also increase our brand so that we can better price our products and better enhance our relationship with the customers. And our sales team, risk management team and development team will work in sync to make sure that everything is compliant with the new rules and regulations. And at the same time, we want to use the WMP business to improve the overall quality of our business. Thank you very much for the question.
From Huatai Securities.
My name is Shujin Chen from Huatai Securities. I have 2 questions. The first one is about the growth of the asset size. And last year, you shrink -- you shrunk your...
I would like to stop you here. Can you please change the quality of the sound and also slow down a little bit?
Is it better? Okay.
I apologize, we still cannot hear you.
The question is, last year you completed the shrinking of the balance sheet. And now you -- we see positive growth of the assets, and so we want to know the overall asset growth. And the second question is about the dividend. And if you look at the tier 1 capital adequacy ratio, because of the dividend, we see that actually it has come down a little bit. And now you have the convertible debt that has already been approved and we want to know when it will be issued. And the second one is the second tier capital debt issuance. And after you issue the debt, what will be the capital adequacy ratio for you? And you have mentioned before that you will maintain a relatively high dividend sharing percentage. Are you going to maintain the 35% like before?
I'm going to answer the question. So first of all, the asset growth for the first half is 2.3%. But now we have moved to a more light operation. So if you look at the overall risk asset, that number has been controlled in the first half of this year. And that has been increased less than RMB 100 billion. And in order to guarantee liquidity, we think that the asset -- overall size of the asset will continue to grow, and the overall growth this year would be around 4% to 8%, and that is the range we have set for this year. And we need to give out dividend. Dividend ratio is 30%. And -- but still, our tier 1 adequacy -- capital adequacy ratio has maintained its level, and that is because we have a lot of organic growth in our bank in order to continue meeting our targets to guarantee our CAR and to guarantee our payout ratio, we think that we can meet our goal. Besides our organic growth, we are also having arrangements to supply capital from outside sources. For example, you have talked about the subordinated debt issuance, and we have already got the approval from PBOC and we probably will issue in early September after the RMB 50 billion issuance and the adequacy ratio will be 12.3%. That is according to our current estimation. Convertible debt, we have got the approval from CBRC, and now we are waiting for CSRC's approval. And CSRC has asked us many questions, and we have provided them with the answers. And now we are still waiting for another discussion about our issuance. That's the end of my answer. [ Lele Lei ] from JPMorgan.
The question is about the personal loans. In recent years, personal loan is a focus of the bank but because of the development of fintech and the clearing of the fintech businesses and also the changes in the policy, so do you think there are risks in personal loans? And do you earmark some provisions or allowances to offset some of the risks in this sector?
Hello, Madam Lei. I'm from the Personal Credit Department. So I'm going to try to answer the question and tell you what happened in the first half of this year. It's been growing very steadily in the past few years. Now it's about -- the balance is about RMB 944 billion, and there is a 7.81% increase in the first half of this year. And the pricing is 6.21%, and that's 0.19 percentage point increase compared to last year. And if you look at NPL, starting from last year, you see NPL in individual or personal credit has gone down. But according to the macro policies in China, you -- we try to focus on 3 areas this year. The first one is the mortgage products, traditional mortgage products. This year, we still ranked at the second in terms of mortgage in the market. And for personal operating loans and the total balance is RMB 184 billion. This is also a very good result. And individual operating loans, the NPL has gone down by 0.2 percentage points compared to the beginning of this year. We have leveraged the advantages of China CITIC. And the third area that we have been focusing on is consumption loans. Consumption loan this year -- now we have been focusing on micro consumption loans and also auto financing. Till the end of June, auto loans in the first half of this year have been given out to 20,000 individuals. And we think that in 2018, the auto loan balance will grow by 30%. From Bank of China International, Madam Lee Zhang.
I have 2 questions. The first one is, the return on investment has increased. Now one of the reason is because you have made a lot of transformations and also you have done some ABS. Can you tell us more about what would happen? And the second one is the Baidu CITIC Bank. And now the asset of the bank has increased to RMB 20 billion. So can you talk about your collaboration or business model with the Baidu CITIC Bank? And can you talk about outlook of this bank in the second half of this year.
For first question, head of financial department. In our noninterest income, the first half of the year, apart from fee, more than RMB 3 billion came from asset transfers. This was largely down to credit card assets transfer. And with the new rules in place, new categories have been added to fair value accounting. And in the second half of this year, related business with the shift from amortized accounting to fair value accounting, we will step up efforts, which will result more income in terms of assets transfer in the second half of the year. There will be some contraction. So there will be changes in the income, so much for my answer.
For the analyst, I am [indiscernible] from IBank. Starting from its inception on October 18 last year, it's been doing very well. We want it to develop inclusive finance to serve individuals and micro businesses, including self-employed businesses and heads of micro businesses, including individuals and businesses in Tier 3 and Tier 4 cities. Now our assets have reached RMB 21.3 billion with more than 3 million customers with RMB 18 billion loan book. In the second half of the year, we will maintain growth development speed that is estimated that by the end of the year will likely to reach a balance of RMB 26 billion to RMB 28 billion. Of course, in this process, we will control risks to maintain good quality of assets.
I'm [indiscernible] Securities. I want to ask about capital quality. We have done big adjustments on the destinations of loans. CITIC is reducing loans to manufacturing, et cetera. So when will you complete the NPL digestion in the corporate sector? How soon will you finish the disposal of NPL in corporate sector? Second, we think in terms of market on CMB as well as other banks are doing a good job in credit banks.
Could you repeat your second question? It's not very clear.
The second question, in recent years, CITIC credit card business has been growing very fast. It is one of your best performers in credit card business. Could you elaborate on the role of the credit card business in terms of profits. In the first half, it was more than RMB 20 billion with a big growth. So do you think the credit card business will continue to grow in such a good way in the second half of the year?
First question, Mr. [indiscernible] from risk management department. Second question, Madam Lee from financial and accounting department.
Thank you very much for raising the question regarding asset quality. President Fang and Director Yao spoke a lot on this topic. Now a couple of things to add. First, in recent years, due to our structural adjustments, asset quality has been greatly consolidated and improved. It is reflected in the following figures. First, we give priority support to personal loans plus credit cards with more than RMB 100 million. Starting from 2015, in the past 3.5 years, our new clients in corporate banking strictly follow our new rules. For 3 high-tech industries and 3 new industries, we increased more than RMB 80 million in corporate lending. So in our total asset balance, it's over RMB 2 trillion. So our corporate loan book has reached more than RMB 1 trillion in terms of industrial structure. Our nagging problem is low-end equipment manufacturing, the processing manufacturing. Private sector accounts for a big share apart from wholesaling and reselling. In the past few years, we have been shrinking the share of these businesses. This year, we took a very important measure to classify the stock loan book into 4 categories. So we did very careful analysis and labeled them to see which book will be supported, which will be cut and which will be contracted. Our delinquent loans from the early of this year as of the end of June, it's tens of billions of RMB. So delinquent loans are a key factor behind the NPL generation. So now we have kept control on delinquent loans. In the first half of the year, the NPL generation was rise in private sectors, especially by region. In Shandong and the [ Borhai ] Rim and Northeast China and Western China such as Inner Mongolia, big private businesses have suffered huge shocks. In the new NPLs, over RMB 100 million were added to the corporate loan book NPLs. A very good arrangement made in the first half of the year was that recently the CSRC issued a new notice. So the state policy has been adjusted, which will give more allowances to private sector, especially the champion businesses in the private sector. So according to our assessment, the NPL trend of the private sector will be tamed. So the asset quality on -- we have very good expectations for the asset quality of the whole year.
Thank you very much for the second question. In recent years, credit card center has been growing very fast and among our peers, we have achieved very good results. Especially in the past 3 years, our core credit card business increased by threefold over 3 years. And since the first half of the year, the credit card business has generated RMB 23.3 billion to RMB 80 billion, an increase of 40% year-on-year. Net operating income was RMB 14 billion, up by 30%. Intermediary business net income RMB 14 billion, up by 40%. You asked about the share of credit card business revenues in retail banking. From our one half figures, it accounted for 91.9%. According to our overall arrangement for the 3 next years, the credit card center -- of course, the financial department can contribute their figures, I can cite some actual figures. Well, let me take over. If we look at the pretax profit, retail accounts for 43%, and breakdown credit cards account for 60% of the retail. So these are the figures for the next steps. We have room for further growth. We expect an increase of 3 to 4 percentage points of credit card business in our retail business.
Thank you, Mr. Fang. In the interest of time, our last caller, please?
Everbright shareholding.
Can you hear me?
Yes, please.
Two questions. What is your consideration for real estate loan or mortgage in the second half of the year? What is your outlook on the changes in the real estate sector? Second, given that the downward trend in consumption, what is your expectation for the growth of consumption loans? And what is your outlook on credit growth for the whole year?
First question, our Risk Director, Mr. Yao, please? Second question, could you repeat your second question? Could you speak louder?
Second question, given the downward consumption trend, what is your expectation for the growth in consumption loan and your outlook on the quality of assets in this area?
Well, let me answer the first question regarding property. So all the banks and the regulators, the media, pay high attention to this sector. CITIC's property sector as of the end of June, our total volume is about RMB 310 billion in total loan book as compared to the beginning of the year, it was a drop of RMB 25.6 billion. So we can see that, first, in the first half of the year in terms of the aggregate of mortgage on -- we imposed control to maintain stability. And second, its share in our total loan book is below 10%. Among our peers, this is an average level. And third, mortgage loans have made contributions to our earnings in past few years. First, the yield of mortgage loans are within the mid- to high range of our corporate business. And second, in terms of asset quality control, we are doing a good job in mortgage loans. The NPL ratio is much lower than other businesses. It's only 0.5% to 0.6%. And underwriting is very low for mortgage loans. There are very few cases of underwriting are write-off. So it is a great support for our business. But we should also see that at the state level, there is concern of the impact of rising property prices, which has become a burden on the households. So at the regulators' level, they don't want to see the runaway housing prices increase. So the regulators are very clear, housing is not for flipping, it's for living. So compared to past years, we see more regulations of the property market. If you look at the policies from the government, the policies to regulate the real estate market has continued for more than 2 years. If you're looking to the past, most of the policies will only continue for several months to 1 year, which is the maximum. But now you see the government is very determined to regulate the real estate market and this is unprecedented. So if you look at this overall trend, we believe, one, as a commercial bank, we need to be in sync with the new policies from the government, secondly, we know that the development of the property market has entered into a new era. It's now in an inflection point. There will be more transformations. From the perspective of our company, we need to maintain overall stability of loans to the real estate market, so we try to follow several principles. First, we work with the mainstream real estate developers. Secondly, we try to put a cap on the total number. Thirdly, we try to meet the inelastic demand from the market because we know some of the developers, they need to build residential buildings. But for commercial buildings, we don't work with the developers too much or the percentage is very, very low in our total loan mix. In terms of the real estate management, in recent 2 years, we have -- we have done a closed management. We have seen -- we have used many different ways to guarantee the completion of the project and the serving of the loans are guaranteed. On the other hand, we also have made some regional strategies in terms of real estate. For example, the Northeast region, Western part of China and some of the remote areas, including third, fourth-tier cities that has a too hot real estate market, we have imposed very tight control over these regional markets. And for first-tier cities, second-tier cities that have actual demand, we provide the loans. So we look at different regions and apply different strategies. Another thing is, we are also thinking in the second half of 2018, on the basis of the first half of this year, we will try to maintain a 0 growth. We want to maintain the current level. So this is about our real estate loans. So even if there are fluctuations in the real estate market, we still have the capability, -- pretty strong capability to withstand the changes in the market. So rest assured, there won't be -- there will not be issues in the real estate loans. Mr. [ Won-bing ] will talk about the consumption loans.
Hello, you have asked about the outlook of the consumption loans and also the estimation of the NPL. Till the end of June, the balance of the consumption loan is about RMB 277 billion, which is ranking high among our peers. And if you look at the newly added loans, the weighted average number is 6.94%, which is pretty -- which has increased compared to last year. If you look at the -- their condo or real estate-backed loans, the percentage is pretty high. So we think that risk can be managed. Starting from the second half of last year to this year, we have seen cleaning up of P2P in the market, and all of these changes in the market did not really reflect on the changes of our NPL. So for the real estate-backed consumption loans, we are going to continue our work, and we also will promote the extending of micro loans. And first of all, we are the leader in the industry to provide products that are linked to your social welfare and personal tax information. Secondly, we provide scenario-based loans -- consumption loans. For example, we are making preparations to getting to the home deco industry. So this will be a good supplement to our overall loan mix. I would like to thank all of our investors and analysts for tuning in, and thank you very much for giving us this opportunity to share information with you. If you have any further questions, please contact our IR team. Thank you very much for your participation. This is the end of today's earnings call. Thank you.