\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 036 China Merchants Bank Co.Ltd(600036) )
On March 18, China Merchants Bank Co.Ltd(600036) released the annual report of 2021, realizing an annual operating revenue of 331253 billion (YoY + 14.0%); The net profit attributable to the parent company was 119922 billion yuan (YoY + 23.2%). The weighted average return on net assets attributable to ordinary shareholders was 16.96%, an increase of 1.23 percentage points year-on-year.
Under 3.0 mode, the company set sail, and the profit growth rate increased at a high level. China Merchants Bank has proposed and implemented the strategic transformation of “light bank” since 2014. With the transformation of “light bank” into the second half, China Merchants Bank began to explore the 3.0 mode in the digital era in 2018, and proposed to create the 3.0 mode of “big wealth management business mode + digital operation mode + open and integrated organization mode” in 2021. The core of the 3.0 model is to change from operating the “bank balance sheet” to operating the “customer balance sheet” at the same time, so as to realize the high-quality and efficient development of the bank in the process of creating value for customers. In 2021, the year-on-year growth rates of CMB’s revenue and net profit attributable to its parent were 14.0% and 23.2% respectively, which were 0.5pct and 1.0pct higher than that of 1-3q respectively. The growth rates of revenue and profit were relatively high in recent years, and still increased steadily on a quarter on quarter basis.
The resilience of scale expansion plus interest margin drives the net interest income to maintain a strong growth trend. In 2021, the net interest income of China Merchants Bank increased by 10.2% year-on-year to 203919 billion yuan. 1) The asset side maintained a high growth rate, and the proportion of retail credit rose to 53.6%. At the end of 2021, the year-on-year growth rate of total assets and loans of China Merchants Bank increased by 1.3pct and 0.9pct respectively compared with that at the end of 3q, reflecting its strong credit extension ability. 2) The ability to acquire core liabilities was strong, and the proportion of deposits increased steadily. In 2021, the deposit growth rate of China Merchants Bank was 2.9pct higher than the debt growth rate, and the deposit balance increased by 5.6% to 6.35 trillion yuan month on month compared with the end of 3q. Under the great pressure of “stabilizing and increasing deposits” in the banking industry, China Merchants Bank has realized the growth of deposit scale and the optimization of structure at the same time, highlighting its strong ability to obtain core liabilities. On the whole, under the pressure of asset side yield, the company’s interest margin still maintained strong toughness, mainly benefiting from debt cost control.
Non interest income grew by 20.75% year-on-year, and the contribution of income from wealth and asset management business was further clarified. The non interest income of China Merchants Bank in the whole year was 127334 billion yuan, of which the net income from handling fees and commissions increased by 18.82% year-on-year to 94.447 billion yuan, mainly driven by the growth of income from wealth management and asset management business.
Asset quality continued to improve, and the level of capital adequacy increased quarter on quarter. The quarter on quarter ratio of non-performing loans has achieved “double decline”. The endogenous capital replenishment capacity was strong, the issuance of superimposed capital instruments was promoted in an orderly manner, and the capital adequacy ratio increased steadily. Profit forecast, valuation and rating: China Merchants Bank Co.Ltd(600036) as a retail benchmark bank, it has strong customer base operation ability. In recent years, with the continuous promotion of big wealth management business, it has strong profitability and excellent asset quality. The company’s capital supplement and profit growth have formed a virtuous cycle. Under the 3.0 mode, the company changes from operating the “bank balance sheet” to operating the “customer balance sheet” at the same time, focusing on customer value creation and improving business performance, which is expected to further open the space for profit growth in the future. Combined with the operation in 2021, the EPS forecast for 202223 is raised to 5.74 yuan (+ 7.2%) / 6.70 yuan (+ 11.2%), and the EPS forecast for 2024 is increased to 7.72 yuan, corresponding to 1.39/1.21/1.06 times of Pb in 202224. Maintain the “buy” rating.
Risk tip: if the downward pressure on the economy continues to increase, it may drag down the effective credit demand and the quality of bank assets. Company profit forecast and valuation summary
