Can revenue maintain high growth? Why are bank financial products broken? What challenges does big wealth management face? How much is the real estate risk exposure?
On March 21, the first day of resumption of work and production in Shenzhen, China Merchants Bank Co.Ltd(600036) a group of executives met with the media and investors through “cloud” video as scheduled. Under this year’s economic situation and the bank’s business environment, the management of China Merchants Bank judged that the first quarter was relatively difficult, but was full of confidence in maintaining a reasonable annual revenue and profit growth.
For the stock price adjustment since the beginning of the year, Miao Jianmin, chairman of China Merchants Bank, responded that the valuation of the market is always reasonable. China Merchants Bank pursues high-quality development and does not pursue the largest market value. The market value is only the result.
At the close of today, China Merchants Bank’s A-share reported 44.81 yuan / share, down 2.95%.
full of confidence in maintaining reasonable growth throughout the year
In 2021, the performance of China Merchants Bank reached a new high, with the highest revenue growth rate in recent five years, the highest net profit growth rate in six years, and the non-performing rate returned to less than 1%.
Wang Liang, executive vice president and Secretary of China Merchants Bank, said that from the growth since the beginning of the year, China Merchants Bank has maintained a stable growth trend in accordance with various plans, and all deposit and loan indicators are within the budget plan at the beginning of the year. At present, the time is still short, and the trend needs to be further observed. On the whole, the banking industry is facing great pressure.
First, the two LPR interest rate declines since last year have put great pressure on maintaining the advantage of net interest rate of return (NIM); Second, banks compete more fiercely for deposits, and the cost of deposits will rise; Third, in terms of non interest income, there were huge fluctuations in the capital market after the beginning of the year, and the fund agency sales and issuance encountered great difficulties. Affected by the capital market, there is also downward pressure on the income of fund consignment in the banking industry.
However, Wang Liang believes that in the long run, he is confident to maintain the stability of the overall operation and the stable growth of non interest income. On the whole, we are full of confidence in maintaining growth throughout the year.
In terms of credit supply, Wang Liang said that this year, we will continue to optimize the loan structure and continue to focus on retail credit in the allocation of loan assets.
however, in terms of retail business, China Merchants Bank admitted that the growth of mortgage loans and consumer loans was weak in the beginning of the year
Wang Jianzhong, vice president of China Merchants Bank, said that due to the adjustment of the epidemic and the expectation of the real estate market, the retail business, which accounts for half of the bank, has indeed been affected. Since this year, the growth of mortgage loans has been relatively difficult, and consumer credit has also been weak. “Recently, China Merchants Bank is increasing the investment and marketing of mortgage, hoping to maintain a certain amount of growth.” He said that after the beginning of the year, we also focused on high-quality customers in the field of consumer loans for continuous marketing, and the overall situation is OK.
four measures to reverse the “net breaking” situation of financial management
For the recent situation of bank financial products falling below the net value, Wang Liang responded that the main reason is that it is directly related to the sharp decline in the capital market this year. At the same time, it is also related to the bank’s innovative financial products last year, such as fixed income + products and equity assets. With the decline in the market this year, the net value of products will fall, or even fall below the net assets.
Wang Liang said that since the implementation of the new asset management regulations in 2018, the bank’s financial management has started the net value transformation, the asset price fluctuates, and the net value of products will fluctuate. This is a trend and normal.
Wang Liang introduced that China Merchants Bank will take four measures to change this situation:
first, in combination with the requirements of bank customers for low-risk asset allocation, further strengthen the launch of fixed income products to meet the low-risk preference needs of bank customers
second, strengthen the construction of investment and research capacity in the equity market, appropriately extend the closure period in terms of term management of equity assets, and obtain excess returns for customers through the extension of the closure period
third, strengthen asset allocation and minimize the concerns of investors caused by pullback and fluctuation
fourth, strengthen the education of investors and realize that after the transformation of bank financial management, the price fluctuation may be normalized, and investors should recognize the trend of this change
Financial management business is only a part of China Merchants Bank’s big wealth management. In 2021, China Merchants Bank’s annual large wealth management revenue reached 52.130 billion yuan, an increase of 33.91%, accounting for nearly 16% of its net operating revenue.
For such achievements, at today’s press conference, Tian Huiyu, President of China Merchants Bank, said that he was “a little worried”. He bluntly said that China Merchants Bank is still far away from a real wealth management institution.
This is because, first, the wealth management products in the Chinese market are not rich enough; Second, in the income structure of wealth management, more than 1 / 3 of last year came from funds. The situation of fund consignment sales in the first quarter of this year is not good, and it is estimated that it will be difficult for the whole year; Third, from the perspective of its own ability, China Merchants Bank is still a sales organization. Its advantages are mainly reflected in channels, not investment research and asset allocation. If these abilities are not improved, it will not dare to pat its chest and say that “China Merchants Bank is a great wealth management organization”.
“China Merchants Bank still has a long way to go from the big wealth management 3.0 model, and we still need patience.” Tian Huiyu said.
housing related loans reduced by 90 billion yuan
it is estimated that the non-performing rate will rise again
For the housing related loans concerned by the market, the management of China Merchants Bank also gave a frank response.
According to the annual report, by the end of 2021, affected by the risk exposure of individual small and medium-sized enterprises and highly indebted real estate enterprises with poor development prospects, the non-performing loan ratio of China Merchants Bank’s real estate industry had increased from 0.3% to 1.41%, and the balance of non-performing loans had increased from 1.19 billion yuan to 5.655 billion yuan.
In this regard, Zhu Jiangtao, vice president and chief risk officer of China Merchants Bank, responded that this is consistent with the overall risk upward trend of the real estate industry last year.
According to Zhu Jiangtao, according to the caliber of the annual report, the total balance of CMB’s housing related business was about 920 billion yuan, down about 90 billion yuan from the beginning of the year. In terms of real estate related assets of wealth management and consignment products, by the end of 2021, the asset balance of China Merchants Bank’s real estate related wealth management business was about 100.8 billion yuan, accounting for less than 6% of the total scale of wealth management, and the default rate was about 0.2%. By the end of 2021, the scale of products sold by China Merchants Bank on a commission basis was 98.8 billion yuan, of which the balance of non-standard real estate sold by private banks on a commission basis was 93.3 billion yuan, and the defaulting customers mainly involved China Fortune Land Development Co.Ltd(600340) and Evergrande.
“The risk of corporate real estate business is still in the stage of risk rise and release, and the non-performing rate of the whole industry will rise further.” Zhu Jiangtao said that China Merchants Bank will also keep pace with the trend this year, but will control the non-performing rate within an acceptable range. As for when the whole industry will peak, we need to pay close attention to the changes in the sales of first-hand and second-hand houses.
Looking forward to the asset quality of the whole bank this year, Zhu Jiangtao expressed confidence to maintain a stable level. The retail assets of China Merchants Bank account for more than 50%. Due to the obvious characteristics of the weak cycle of the whole retail assets, the overall anti risk ability is relatively strong.
For the external risk situation, Zhu Jiangtao judged that the overall risk is rising, so he will strengthen the control of key risk areas, such as real estate and government businesses in some regions.
