Agricultural Bank of China Ltd. Q2 FY2026 earnings call

• Financial Performance: Net profit grew by 5.8%, with operating income up 11.2%. Return on net assets stood at 10.14%. Net interest margin expanded by 2 basis points to 1.28% due to effective volume-price management.
• Asset Growth: Financing included in H1 reached 2.2 trillion yuan, with loans increasing by 1.9 trillion yuan (+6.2%) and bond investments by 1.5 trillion yuan (+9.6%).
• Deposit Stability: Average daily deposit balance reached 39.5 trillion yuan (+3.6 trillion). The deposit evasion ratio decreased by 2.36 percentage points year-on-year, remaining below 3% for nine consecutive quarters.
• Rural Revitalization Focus: County-level loan balance reached 11.92 trillion yuan (+9%). Exclusive productive performance ('Hui Nong Yidan Nong') hit 41 trillion yuan (+42.2%). County-level deposits contributed 40% to total growth, with county-level borrowers accounting for 56.8% of grants.
• Digital & AI Innovation: Completed cloud computing and AI applications. Mobile banking users exceeded 280 million. Deployed 'Dragon Knights' AI agents and 'Yiming' AI assistant to enhance customer service and risk control. Average daily trading volume of the distributed core system increased by ~70%.
• Customer Base: Individual customers reached 905 million (industry leader). Corporate customers exceeded 14 million. Personal mobile banking active users reached 215 million.
• Dividend Policy: Proposed interim dividend of 1.297 yuan per 10 shares, raising the payout ratio by 1 percentage point to 31%.

The transcript does not provide a breakdown of financial performance by specific product segments (e.g., Corporate Banking, Retail Banking, Treasury) in terms of absolute revenue or percentage contribution. It reports consolidated figures: Net profit increased by 5.8% year-on-year; operating income increased by 11.2%; and the return on net assets was 10.14%. The bank also reported an interim dividend payout ratio of 31%.

• Profitability: Management expressed confidence in maintaining stable operational revenue and faster development in the second half of the year, driven by structural economic upgrades.
• Net Interest Margin: Expects continued orderly decline in liability costs as high-interest prime deposits mature, supporting margin stability.
• Asset Quality: Aims to maintain high asset quality with strict credit structure optimization and targeted risk control for inclusive retail finance.
• Capital Management: Plans to optimize funding sources, including inter-bank deposits and central bank loans, to maximize benefits from deposit repricing.

• Asset Quality Control: Emphasis on reducing non-performing loans (NPLs), particularly in inclusive retail finance. NPL ratio was 1.65% as of June 30, with allowance coverage exceeding 1 trillion yuan.
• Real Estate & Local Debt: Monitors real estate industry risks (stable NPL ratio) and local government platform debt, adhering to market-oriented transformation while preventing new hidden debt.
• AI & Technology Risks: Acknowledges risks associated with AI, such as 'black box' effects and hallucinations, committing to strict scenario-based management and compliance.
• Intermediary Risks: Strictly prohibits intermediaries in marketing to avoid bad outcomes and ensures frontline staff accountability in due diligence.

Q: What are the expectations for H2 growth and key driving forces? / A: Management expects stable growth driven by four factors: leveraging rural revitalization advantages for asset operation, continuing the orderly decline in liability costs as high-interest deposits mature, expanding diversified financial services to support economic structural optimization, and maintaining robust risk control foundations established during the 14th Five-Year Plan.

Q: What is the outlook for asset quality, specifically in inclusive retail finance? / A: Asset quality remains strong with an NPL ratio of 1.65% and allowance coverage over 1 trillion yuan. For inclusive retail, ABC will optimize credit structures, implement long-term risk monitoring mechanisms, and enforce strict due diligence responsibilities to manage residual NPLs and prevent disorderly competition in high-risk sectors.

Q: How will ABC sustain deposit growth amidst changing social capital flows? / A: ABC aims to maintain its leading position by consolidating customer advantages, managing the maturity cycle of high-interest deposits to reduce costs, and diversifying funding sources through settlement payments and inter-bank instruments. The bank plans to maximize benefits from deposit repricing and strengthen differentiated deposit management to lower interest expenses.

Q: What are the strategic priorities for county-level business development? / A: ABC targets county-level business to account for ~40% of overall operations. Strategies include prioritizing resources for rural revitalization, creating 'one village, one product' tailored solutions, expanding physical networks by 2,000 outlets, and using AI to empower rural services while strictly controlling risks in agriculture-related lending.

Q: How is ABC integrating AI into its operations and future strategy? / A: ABC has deployed AI agents like 'Dragon Knights' and 'Yiming' to enhance customer service, risk control, and branch efficiency. Future focus includes deepening AI agent usage across scenarios, strengthening fundamental AI infrastructure, and implementing strict risk controls to mitigate AI-specific risks like hallucinations, ensuring stable and controllable technological application.