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Agricultural Bank of China Limited Releases 2020 Interim Results

(Hong Kong, August 31, 2020) Agricultural Bank of China Limited (“ABC” or “the Bank”; Stock Code SH: 601288; HK: 1288) released its 2020 interim report on August 30.

Maintaining generally stable business operation

By the end of June, ABC’s total assets reached RMB26.47 trillion, up 6.4% over the end of the previous year. The deposit balance reached RMB20.36 trillion, representing an increase of 8.0%. The total amount of loans and advances granted stood at RMB14.55 trillion, an increase of 8.9%. The balance of NPLs was RMB207.75 billion, an increase of RMB20.54 billion from the end of previous year, and the NPL ratio was 1.43%, a slight increase of 0.03 percentage points from the end of the previous year. Asset quality was generally stable. The provision coverage ratio was 284.97%, maintaining at a relatively high level. In the first half of the year, ABC recorded a net profit of RMB109.19 billion, with basic EPS stood at RMB0.30. The return on average assets (ROAA) was 0.85%, and the weighted return on average equity (ROAE) was 11.94%. ABC successfully issued perpetual bonds of RMB85 billion and tier-2 capital bonds of RMB40 billion, raising its capital adequacy ratio to 16.42%, an increase of 0.29 percentage points from the end of the previous year. The cost-to-income ratio stood at 24.64%, a decrease of 1.11 percentage points year on year.

Serving the real economy in a solid and strong way

 ABC continued to enhance financial services in both key areas and weak links of the national economy. In the first half of the year, ABC granted RMB1.17 trillion of new loans to the real sector, an increment of RMB225.9 billion from the corresponding period of the previous year, and the interest rate of such loans was 4.44%, down 39bps from the previous year. ABC adopted a series of special policies and measures to support key enterprises in epidemic prevention and control, resumption of work and production, spring farming preparation, stable production and supply, development of the hogs production, and “foreign trade stability”. In the first half of 2020, a total of RMB33.56 billion of loans were granted to 1,082 nation-wide key enterprises engaged in epidemic prevention and control. Loans to key enterprises to ensure stable production of agricultural products increased by 40% since the beginning of the year, and loans related to hogs production doubled over the year beginning. Upholding the principle of “no forced early repayment, no cut-off, no delay in loan offering”, ABC provided relief support for up to 35,000 micro, small and medium-sized enterprises and individually-owned businesses with loan extensions and renewals. ABC vigorously served the replacement of old growth drivers with new ones by granting loans to 203,400 customers from the manufacturing sector (categorized by the actual purpose of the loan) with a balance of RMB1.46 trillion, up 47,700 customers and RMB143.62 billion respectively over the year beginning. The balance of loans granted to growing sectors including strategic emerging sectors and the modern service sector was RMB1,182.6 billion, up RMB107.86 billion over the year beginning. At the same time, ABC also vigorously served the national strategy for expanding domestic demand, strengthened services for people’s livelihood and consumer finance, and increased personal loans by RMB437.9 billion in the first half. Moreover, the Bank accelerated its innovation for county-level financial services, and the balance of county-level loans exceeded RMB5 trillion, an increase of 11%, which was 2.1 percentage points higher than the Bank’s overall loan growth.

Achieving remarkable results in poverty alleviation

 To help win the fight against poverty, ABC issued more conducive supporting policies and incentives in terms of loan volume, economic capital, financial resource allocation, product innovation, and talents cultivation. To step up policy guidance, ABC introduced effective mechanisms to ensure that the responsibilities, policies and measures are clear and in place. These mechanisms include designating senior managers from the Head Office and branches to offer direct guidance for sub-branches located in counties that have not been lifted out of poverty, pairing Head Office departments with poor villages to facilitate poverty alleviation, and providing special guidance and supervision to sub-branches located in the 52 counties that have not been lifted out of poverty. ABC stepped up loan offering to poverty-stricken areas. In the first half of 2020, new loans to 832 key counties of national poverty alleviation, deeply impoverished counties, and targeted poverty alleviation were higher year on year, with growth faster than the Bank’s average loan growth. ABC issued tailored policies to support poor counties. The outstanding loans of the 52 poor counties were RMB71.42 billion, an increase of 25.2% year on year, which was 16.3 percentage points higher than the Bank’s overall loan growth rate. ABC launched special programs to boost the consumption of products from poor areas and promoted the “Poverty Alleviation Mall” embedded in its mobile platform. By working with 261 central and local institutions, ABC all together purchased and promoted the sale of over RMB0.6 billion worth of agricultural products from poor areas. ABC also invested nearly RMB0.1 billion in four designated poverty alleviation counties, namely Wuqiang and Raoyang of Hebei, Huangping of Guizhou, and Xiushan of Chongqing. As of now, all four counties have been lifted out of poverty.

Making new breakthroughs in inclusive finance

 ABC provided “more loans with lower cost, better terms and larger coverage” to small and micro businesses, improved the institutional arrangements and working mechanism, accelerated product and service innovation, stepped up incentives policies, enhanced customer coverage with better satisfaction and availability of inclusive financial services. By the end of June, the balance of loans to inclusive small and micro enterprises was RMB866.14 billion, an increase of RMB273.84 billion or 46.2% year on year, which was 37.3 percentage points higher than the Bank’s overall loan growth rate. The number of customers with loans was 1,503,400, an increase of 394,300 year on year. The comprehensive financing cost of loans to inclusive small and micro enterprises decreased by 1.3 percentage points year on year. ABC strengthened technological empowerment by optimizing and innovating its online product portfolio of inclusive finance, and went all-out to make the inclusive financial services more internet-based and intelligent, with new online inclusive finance loans accounted for over 90%. ABC continued to optimize its loan structure by significantly increasing the proportion of first-time loans, renewed loans, credit-based loans, and medium and long term loans. It strengthened the role of incentives by rolling out exclusive policies for small and micro businesses in terms of economic capital, incentive wages, and budget allocation, and implemented liability exemption policies when due diligence is performed for primary-level institutions, in an effort to fully motivate and protect their enthusiasm and initiative to promote inclusive financial services. ABC strengthened the development of sub-branches specialized in offering inclusive financial services, and designated 1000 H.O. selected sub-branches and 900 provincial branch selected sub-branches in this effort. Special policy support and business guidance are provided to these institutions to promote their professional capabilities of inclusive financial service.

Advancing in-depth digital transformation

  ABC comprehensively advanced the implementation of its digital transformation strategy following the principle of “Internet-based, data-driven, intelligent, and open”. In response to the financing demand for the fight against COVID-19 and the resumption of production and work, ABC vigorously developed “contactless” financial services, with online customer base expanding significantly. By the end of June, the balance of “ABC e-Loan”, a product portfolio, was RMB999.3 billion, an increase of RMB410 billion from the beginning of the year. Under this product portfolio, the growth rate of both “Personal e-Loan” and “Huinong e-Loan” exceeded 50%. The balance of both “Small and Micro Enterprise e-Loan” and “Industrial e-Loan” doubled. With the goal of platform optimization and user experience improvement, ABC initiated the mobile banking development project. By the end of June, the number of personal mobile banking customers reached 332 million, an increase of 21.84 million from the beginning of the year. The number of monthly active user was 78.45 million, an increase of 6.07 million from the beginning of the year. ABC quickly expanded the coverage of key scenarios such as smart medical service, smart schools, and smart government affairs, with a net increase of 26800 scenarios in the first half of this year, reaching 26.05 million customers. ABC promoted digital marketing tools such as the digital system for customer relationship management, “Digital Human” account management, and online “Financial Service Store”. As a result, the bank’s online financial transactions reached RMB145.3 trillion in the first half, an increase of 5.65% year on year. ABC explored new online marketing methods by employing live streaming and short videos on social media, and carried out 2,103 online marketing events, attracting 137 million participants.