Summary of Key Points from the Conference Call Industry Overview - The conference call involved 21 China financial companies, including banks, brokers, and fintech firms, discussing the financial services industry in China, particularly focusing on the third quarter results and outlook for the future [1][2]. Key Insights on Banks 1. **Net Interest Margins (NIMs) Outlook**: - Commercial bank NIM was flat quarter-on-quarter in 3Q25, indicating signs of stabilization. Banks expect NIMs to stabilize in 1H26, driven by slower declines in loan yields and ongoing repricing of time deposits [4][6]. - NIMs may face downward pressure due to concentrated loan repricing in 1Q26, but banks generally believe the decline will continue to narrow [4][6]. 2. **Credit Demand**: - Year-to-date, bank loan growth has been primarily driven by corporate loans, contributing 92% of new loans. Credit demand remains weak, particularly in retail loans, with expectations of further slowdown in 4Q25 [12][18]. - Mortgage demand is weak due to a sluggish property market, and while non-mortgage retail loans are growing slightly faster, banks remain cautious in lending [13][14]. 3. **Asset Quality Risks**: - Banks report a year-on-year decrease in new non-performing loan (NPL) formation for corporate loans, but property loans remain a significant source of new corporate NPLs. Banks have made sufficient provisions for property loans, providing a buffer against NPL ratios [19][20]. - Retail loan NPL formation has increased year-on-year, but risks are considered manageable due to low proportions of non-mortgage consumer loans and low loan-to-value ratios [25][27]. 4. **Non-Interest Income Growth**: - Fee income showed strong performance in 3Q25, driven by capital market activities and corporate loan growth. Banks expect continued positive trends in fee income despite potential impacts from fee cuts in mutual funds [32][35]. 5. **Capital Adequacy and Shareholder Returns**: - Some banks experienced a decline in CET-1 ratios due to rising bond market rates and new loans with higher risk weightings. However, capital adequacy is improving overall, supporting asset growth and risk absorption [40][41]. - Banks are gradually increasing dividend payout ratios, attracting long-term investors despite a decline in dividend yields from previous highs [41][43]. Regulatory Impacts 1. **Loan Facilitation Platforms**: - New regulations require clear disclosure of loan costs, impacting pricing and risk. Loan volumes are expected to contract in 4Q25 and 1Q26, with a potential recovery in 2Q26 if risks stabilize [46][47]. - Consumer finance companies are required to lower average loan interest rates, but the impact is expected to be manageable for top-tier platforms [48][51]. 2. **Consumer Finance**: - Banks are shrinking their internet loan portfolios and focusing on self-operated loans due to rising retail risks. This shift may suppress retail credit growth in the short term [50][51]. Capital Markets Insights 1. **Broker Performance**: - Brokers experienced higher trading volumes in 3Q25, with expectations of sustained performance due to ongoing bank deposit migration and strong investor sentiment [53][54]. - CICC is focusing on institutional business but sees rising wealth management income due to strong demand in IPO subscriptions [53][54]. 2. **Financial Software Companies**: - Financial software companies may benefit from capital market recovery, but outcomes vary. Brokers are increasing IT budgets due to trading activity, while fund companies are cautious due to declining AUM and fee rates [59][61]. Conclusion - The financial services industry in China is navigating a complex landscape with stabilizing NIMs, weak credit demand, manageable asset quality risks, and evolving regulatory impacts. The outlook for banks and brokers remains cautiously optimistic, with potential growth in non-interest income and capital markets activity.

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Financial Data and Key Metrics Changes - Profit before tax, excluding treasury, grew by 11.4% year on year to INR 156.90 billion in Q1 FY '26 [4] - Core operating profit increased by 13.6% year on year to INR 175.05 billion [4] - Profit after tax grew by 15.5% year on year to INR 127.68 billion [4] - Total deposits grew by 12.8% year on year and were flat sequentially [4] - Average current and savings account deposits grew by 8.7% year on year and 3.9% sequentially [5] - Net interest income increased by 10.6% year on year to INR 216.35 billion [17][18] - Noninterest income, excluding treasury, grew by 13.7% year on year to INR 72.64 billion [21] Business Line Data and Key Metrics Changes - Domestic loan portfolio grew by 12% year on year and 1.5% sequentially [5] - Retail loan portfolio grew by 6.9% year on year and 0.5% sequentially [5] - Business banking portfolio grew by 29.7% year on year and 3.7% sequentially [6] - Corporate portfolio grew by 7.5% year on year but declined by 1.4% sequentially [6] - Mortgage portfolio grew by 10.3% year on year and 1.9% sequentially [9] - Auto loans grew by 2.2% year on year but declined by 0.7% sequentially [9] Market Data and Key Metrics Changes - The net NPA ratio was 0.41% at 06/30/2025 compared to 0.43% at 06/30/2024 [7] - The provisioning coverage ratio on non-performing loans was 75.3% at 06/30/2025 [7] - The capital position remained strong with a CET1 ratio of 16.31% and total capital adequacy ratio of 16.97% [8] Company Strategy and Development Direction - The strategic focus is on growing profit before tax through a customer-centric approach and enhancing delivery capabilities [3] - The company aims to maintain a strong balance sheet, prudent provisioning, and healthy levels of capital while delivering sustainable returns [8] - The business banking segment is expected to grow faster than the overall loan book, indicating a focus on this area for future growth [54] Management Comments on Operating Environment and Future Outlook - Management noted that global events have impacted sentiment but expects positive effects from monetary easing [35] - The company is optimistic about growth opportunities and aims to drive risk-calibrated profitable growth [8] - Management indicated that the current credit environment is benign, with negligible credit costs [67] Other Important Information - The total provisions during the quarter were INR 18.15 billion, which is 10.4% of core operating profit [23] - The profit after tax of ICICI Life was INR 3.02 billion in Q1 FY '26 compared to INR 2.25 billion in Q1 FY '25 [26] - The combined ratio for ICICI General stood at 102.9% in Q1 FY '26 compared to 102.3% in Q1 FY '25 [26] Q&A Session Summary Question: Margin assessment and growth outlook - The reported margin for Q4 would have been lower than 4.41% when adjusted for the new method, and growth is expected to stabilize after a quarter [34][35] Question: Corporate loan mix and business banking performance - The decline in high-rated corporate loans is due to demand and pricing factors, while business banking growth is attributed to distribution and technology improvements [51][54] Question: Deposit behavior and competition - The company does not foresee significant changes in competitive scenarios despite rate cuts, focusing on customer acquisition and maintaining market share [56] Question: Unsecured retail growth and asset quality management - The company is optimistic about growth in personal loans and credit cards, with a focus on maintaining asset quality through continuous monitoring [64][67]