\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 036 China Merchants Bank Co.Ltd(600036) )
Summary of annual report: China Merchants Bank Co.Ltd(600036) 2021 net profit increased by 23.2% year-on-year. Net interest income increased by 10.2% year-on-year, net fee income increased by 18.8%, other non interest income increased by 26.7% year-on-year, and operating income increased by 14.0% year-on-year; At the end of the year, total assets increased by 10.6%, loans increased by 10.8% and deposits increased by 12.8%. The year-end non-performing rate was 0.91%, the provision coverage rate was 484%, and the core tier 1 capital adequacy ratio was 12.66%.
China Merchants Bank Co.Ltd(600036) annual report performance continued to increase, profitability further improved, capital strength continued to strengthen, net interest margin continued to rise month on month in the fourth quarter, handling charges increased rapidly, and asset quality remained excellent. We believe that the company has a solid customer base and customer management ability, leading wealth management ability and excellent asset liability control ability. With the promotion of the company’s big wealth and digital strategy, its competitive advantage may be further highlighted. Continue to be optimistic about the investment value of the company and maintain the buy rating.
Key points supporting rating
The profit growth rate was in the forefront of comparable peers, and roe and ROA increased year-on-year
In the fourth quarter, the net profit of CMB in a single quarter increased by 26.8% year-on-year, driving the annual net profit to achieve a year-on-year increase of 23.2%. The growth rate was 1 percentage point higher than that in the first three quarters, and the growth rate was in the forefront of comparable peers. In terms of splitting, the improvement of revenue and the reduction of provision have promoted the marginal increase of profit growth. The company’s annual revenue increased by 14.0% year-on-year, 0.5 percentage points higher than that in the first three quarters; The annual net fee income increased by 18.8% (vs the first three quarters, + 19.7%), maintaining a rapid growth rate. The company’s incremental provision increased by 2% year-on-year, which promoted the growth rate of annual net profit to 23.2% from 14.4% before provision. The company’s annual ROA and roe increased by 0.13 and 1.23 percentage points year-on-year to 1.36% and 16.96% respectively.
Asset quality improved and credit provision coverage increased
All adverse indicators performed well. The generation rate of non-performing assets improved year-on-year and accelerated in the second half of the year compared with the first half of the year, which is expected to be related to off balance sheet transfer in. Adverse marginal pressure may still come from real estate, and the actual loss under the real estate stability maintenance policy may be limited. In the fourth quarter, the provision for loan impairment losses increased significantly, the off balance sheet impairment decreased, and the coverage of loan provisions increased significantly, partly due to the transfer in of off balance sheet provisions.
Valuation
Considering that the company’s excellent asset management ability and big wealth strategy have led to a high increase in handling fee income, we raised the company’s EPS in 2022 / 2023 to 5.46/6.21 yuan (formerly 5.24/5.96 yuan). At present, the stock price corresponds to 1.34/1.09 times of Pb in 2022 / 2023, maintaining the buy rating.
Main risks of rating
The economic downturn led to the deterioration of asset quality exceeding expectations and financial supervision exceeding expectations.
