Since the beginning of the year, recovery of the global economy underperformed expectations, as increased divergence between the macroeconomic policies of major economies and Brexit added to uncertainties in the global economy. Against such a background, the Chinese economy managed to stay broadly stable, with all major indicators within a reasonable range. However, structural problems were still obvious, and the pressure of economic downturn was great. Against an external environment with mounting difficulties and austere challenges, we improved management, and deepened reform, innovation and business transformation. We actively resolved the various difficulties, fostered stability, made progress, realized stable operation, and achieved tangible interim results.
The Bank maintained stable operations: we overcame various difficulties and sustained the profit growth; and in the meantime, we kept the asset quality stable and put various risks under control. Since the beginning of the year, a series of measures adopted by the Bank to boost income and reduce expense came into play. In response to the situation that growing NPLs pushed up the credit risk cost, concentrated re-pricing of deposits and loans arising from the successive interest rate cuts during 2015 narrowed the Bank's interest spread, and reduction of service fees to develop inclusive finance challenged the efforts to maintain profit growth, the Bank pressed ahead with business transformation and innovation to tap the potentials and increase the profit. In the first half year, the Bank recorded before-provision profit of RMB239,508 million and net profit of RMB150,656 million, up 1.2% and 0.8% when compared to the same period last year, respectively. More encouragingly, the Bank's profit growth structure witnessed profound changes, with the development potential of a number of new business fields expanding continuously. The Bank realized net fee and commission income of RMB81,715 million, up 6.0% from the same period of last year, accounting for 24.84% of the Bank's operating income, up 3.40 percentage points from 2015. This critically boosted the Bank's profit growth. Through rigorous cost control, the Bank's operating expenses (excluding business tax and surcharges) fell 3.4% from the same period of last year, and its cost-to-income ratio was controlled at 23.44%. These operating results were achieved on the basis of effective control of credit and other risks. In response to the growing financing risks during the economic downturns, the Bank paid close attention to maintenance of stable credit asset quality, implemented the responsibility mechanism for quality management level by level, set up a new credit institutional mechanism, a team of experts and a new credit culture to adapt to the economic new normal, and adopted various measures to step up resolution of NPLs. The outstanding NPLs amounted to RMB196,303 million at the end of June 2016, up RMB16,785 million from the end of last year but down RMB8,356 million from the end of the first quarter; and its NPL ratio stood at 1.55%, up 0.05 percentage points from the end of last year but down 0.11 percentage points on the first quarter. Despite the on-going grave pressure of NPL rebound, the Bank kept the overall credit risks under control. In addition, in response to the frequent breakout of financial risk incidents, the Bank took this year as a “year to consolidate the internal control and compliance basis”, deepened governance of risks in “ten major fields and critical links”, and resolutely prevented and curbed breakout of various cases and risk incidents.
The Bank made progress: we improved the financial service by focusing on improving quality and efficiency of the real economy, and deepened business transformation, reform and innovation in order to build new growth steams. The Bank improved whole-process management and integrated service of new and existing credit business and of credit and non-credit financing businesses. During the first half year, domestic branches cumulatively issued RMB4.7 trillion of loans, including new loans granted of RMB569,900 million, with an increase of RMB11,100 million and up 5.2% from the same period of last year. We re-lent RMB1.2 trillion loans recovered, and taking into account the actual new loans granted, the Bank's new loans granted reached about RMB1.8 trillion. The Bank proactively adapted to the corporate financial disintermediation trend, and met diverse demand of enterprises through bond underwriting, asset transaction, financial leasing, entrusted loans, etc. During the first half year, transactions of this type of new financing business amounted to RMB713,700 million, representing 7 times of the incremental corporate loans. While the new business effectively offset decline in the Bank's corporate loans, it also helped reduce the leverage and cost of the enterprises. In terms of directions, the Bank properly controlled the relationship between support and control, progress and retreat, and beefed up fund support to the fields that could strengthen the weak links in the real economy and upgrade the economic development quality. The Bank increased support to key construction projects, and issued cumulatively RMB487,400 million worth of project loans, up RMB79,900 million from the same period of last year. We adapted to the needs of industrial structure upgrade, and supported development of the “Made in China 2025”, “Internet+” and energy saving and environmental protection initiatives. The Bank innovated and promoted the combination of dedicated offline operation and standardardized online service in the small and micro financial service model, and our loans to small and micro enterprises increased by RMB178,200 million or 9.9% from the same period of last year. The Bank actively supported the reasonable housing demand and consumption upgrade of residents, and its housing mortgage loans and personal consumer loans grew by RMB329,177 million during the reporting period, accounting for 44.3% of the total loan growth. The Bank vigorously supported the “Go Global” initiative of enterprises, and lent USD20,100 million to 39 “Go Global” projects during the first half year. In supporting the transformation and upgrade of the real economy, the Bank improved its operating quality, and cultivated new growth engines through development of new industries and new segments.
The Bank relentlessly pushed ahead with business transformation, accelerated fostering of new growth engines, and upgraded growth momentum of traditional business. As a traditionally advantaged business, retail banking played a stabilizing role and helped iron out the cyclical business fluctuations during the Bank's business innovation and development. Financial assets of personal customers reached RMB12 trillion, and contribution of the retail business rose close to 40%. The fee-based business, which serves demand of the real economy and customers on the basis of standard operation, also maintained fast growth, among which income from agency personal insurance, third-party custody, asset custody, corporate settlement, and bond underwriting businesses grew by more than 30%. The Bank issued 118 million credit cards, making it the largest credit card issuer in the world. We also realized rapid development in the internet-based finance business -one of the Bank's highlights during the business transformation, and realized continued improvement in the business scale, number of customers, and business activity. ICBC Mobile, the open online banking platform, had 215 million customers; ICBC Mall, the online commerce platform, registered turnover of RMB681.4 billion; ICBC Link, the instant communication platform, had about 30 million registered users; and with official rollout of the QR payment product, the number of ICBC e-Payment customers exceeded 100 million. Overall, the Bank has built up an increasingly mature financial ecosystem that integrates online and offline services.
The Bank promoted implementation of various reform initiatives in the key business fields, and boosted continuous unleashing of innovative impetus and operating vitality. We pushed ahead with construction of the coordinated joint operation mechanism in the asset management business, and enhanced value creation capability along the whole business chain. We kick-started construction of the revolutionary enterprise data application system on all fronts, in order to give full effect to the big data's fundamental and leading role in risk control, marketing, product innovation and management decision-making. We achieved positive progress in the establishment of the new credit operation and monitoring system, and through combination of the Bank's risk management experience and the big data technology, further reinforced the strength of dynamic risk monitoring and real-time risk control. We reformed the credit operation management system in some pilot branches which has highlighted the importance of risk orientation, expert loan management and matching between rights and responsibilities. We are forging a new operation management system for the interbank and bill businesses in light of the needs of business transformation and the new regulatory environment, which enriches and broadens the source of income while strengthening the substantive risk control. We accelerated optimization of the outlet layout and renovation of outlet functions in an effort to foster online-offline integrated development and build competitive strength. During the first half year, the Bank optimized the layout of nearly 700 outlets and renovated 3,619 outlets into smart outlets. We promoted the application of more concise and efficient service procedures and new business models across the Bank's outlets, and further improved the customer experience. Targeting mainly the city branches, we launched the competitiveness improvement strategy across various institutions, promoted unleashing of the operating vitality, and greatly enhanced the innovation capability and management efficiency.
The Bank's steady development against the complicated operating conditions won recognitions in the market. During the first half year, the Bank won dozens of awards from influential domestic and overseas media and famous awarding institutions. In particular, we were ranked the 1st place among the Global 2000 selected by Forbes for the fourth successive year, and topped the sub-list of commercial banks elected by the US magazine Fortune and the Top 1000 World Banks elected by The Banker.
2016 is the 10th anniversary of the Bank's joint stock reform and listing. The past decade represents a golden stage during the Bank's reform and development, during which the Bank achieved both growth of business volume and improvement of quality. At the historic point of time that links the past and the future, we will cherish the phenomenal success achieved over the past decade, clearly understand the risks and challenges on the future development path, boost confidence in facing the economic development conditions, and make big strides on the way of building a modern financial enterprise. At the historic point of time that links the past and the future, we will dare to face all difficulties, avoid being impetuous, insist on full implementation of the blueprint while setting our eyes on new changes in the operating environment, enrich the connotation of business strategies and improve the strategic measures from the perspective of reform and innovation, while pursuing the rigorous implementation of the business strategies. In particular, we will rely more on existing asset migration to boost asset flow and release the asset resources, take a more proactive attitude towards developing businesses that consume less or no capital, cultivate new growth drivers and diversify the sources of income more actively, adjust the channel structure and facilitate intensive operation in a more efficient manner, promote convergence and innovation of technologies with the business more fully, continue to improve capital management and enterprise risk management, pay more attention to credit risk management and maintenance of stable asset quality, support steady, coordinated and sustainable development of all businesses through micro-level vitality, and paint a new bright future through inheritance and innovation.