\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 036 China Merchants Bank Co.Ltd(600036) )
Core view
On March 18, China Merchants Bank Co.Ltd(600036) released the 2021 annual report. In 2021, the revenue reached 331253 billion yuan, a year-on-year increase of 14.04%; The net profit attributable to the parent company was 119922 billion yuan, a year-on-year increase of 23.20%. The annual net interest margin is 2.48%; Non interest income accounted for 44.2% of net revenue year-on-year.
Revenue maintained double-digit growth, and roae’s leading position remained stable. The single quarter revenue of 21q4 was 79.843 billion yuan, a year-on-year increase of 15.63%, higher than that of 21q3. For four consecutive quarters, the growth rate of non interest in a single quarter was higher than that of revenue, and the characteristics of “light bank” were prominent. The net profit attributable to the parent company in the single quarter of 21q4 was 26.307 billion yuan, a year-on-year increase of 26.85%, higher than that of 21q3. In 2021, roaa and roae were 1.36% and 16.96% respectively, up 0.13pct and 1.23pct respectively year-on-year, and the performance continued to strengthen. Roae was the first listed bank in the disclosed performance express, and the leading position of the sector was stable.
The single quarter interest rate spread rose month on month, and the big wealth management strategy realized value output. 21q4 single quarter net interest margin was 2.48%, maintaining the upward 1bp trend of Q3. The average rate of return of interest bearing assets and the average cost rate of interest bearing liabilities in Q4 were flat month on month compared with Q3; The strong upward trend of single quarter interest rate spread is mainly driven by the “volume increase” of interest bearing assets. With the coordinated development of wealth management and asset management fees, the flywheel effect appears. In 2021, non interest income was 127334 billion yuan, with a year-on-year increase of 20.75%, accounting for 38.44% of revenue and 28.51% of medium revenue. In terms of sub items, the handling fee income of wealth management and asset management increased by 38.70% and 57.52% respectively year-on-year, and the income of consignment funds, insurance and financial management increased by more than 35%.
Retail AUM exceeded 10 trillion, and financial management subsidiaries are booming. By the end of 2021, retail AUM and private AUM were 10.76 trillion yuan and 3.39 trillion yuan respectively, with a year-on-year increase of 20.33% and 22.32% respectively. The growth rate of retail AUM was wider than that in 2020. The scale of retail AUM has risen to 1.16 times of the scale of assets on the balance sheet, strengthening the position of “retail benchmark”. In 2021, CMB financial management achieved a revenue of 5.203 billion yuan, a year-on-year increase of 37.94%; The net profit was 3.202 billion yuan, a year-on-year increase of 32.03%. The balance of non breakeven financial management within the group’s criteria was 2.78 trillion yuan, an increase of 13.57% year-on-year. It opened early and had a good customer base, helping China Merchants Bank‘s financial management get on the right track of rapid development; The balance of new products conforming to the new regulations of asset management accounts for 93.53% of the balance of financial products, and the net worth transformation is smooth.
The “double drop in the amount rate” of non-performing loans restricts the quality of assets for public housing loans. By the end of 2021, the balance of non-performing loans was 50.862 billion yuan, a year-on-year decrease of 513 PCT; The non-performing loan ratio was 0.91%, down 16bp year-on-year, and the stock of non-performing loans continued to drop. The annualized NPL generation rate was 0.95%, unchanged for four consecutive quarters, down 31bp year-on-year, and the incremental risk was also reduced. The concern rate rose 3bp year-on-year, mainly due to the adjustment of the time point of overdue recognition of credit card loans and the strengthening of the risk recognition of retail loans. The generalized defect rate was 1.75%, down 13bp year-on-year. The non-performing rate of public real estate increased by 1.11pct to 1.41% year-on-year, which was mainly affected by the rising debt risk of some real estate enterprises, which was higher than the overall non-performing rate of public loans; The quality of retail loan assets remained stable and improved.
Actively reduce the proportion of real estate loans and continue to have excellent storage capacity. At the end of 2021, affected by policy regulation, the proportion of public housing loans in total loans decreased to 7.21%, a year-on-year decrease of 56bp. The growth rate of mortgage loans decreased significantly from 15.04% in 2020 to 7.81%, but the contraction rate in the second half of the year was relatively small. The growth rate of small and micro loans and credit cards increased steadily, especially credit card loans gradually came out of the haze of the epidemic. At the end of 2021, the deposit balance was 6.35 trillion yuan, with a year-on-year increase of 12.77%. It is one of the few listed banks with positive deposit and loan growth scissors, and its capacity to attract deposits is very prominent. Demand deposits accounted for 66.34%, up 48bp from the end of 2020. The high growth of low-cost deposits, combined with the upward proportion of demand deposits, helps to stabilize the performance of interest margin and provides a continuous driving force for credit supply.
Under the premise of thickening the provision coverage, the stage of provision back feeding profits will be started. At the end of 2021, the provision coverage ratio was 483.87%, up 46.19 PCT year-on-year, and the risk resilience was enhanced. In 2021, a total of 65.962 billion yuan of credit impairment losses were withdrawn, of which the provision proportion of non loan was 43.88%, which was significantly higher than that in 2020. By the end of 2021, the financial management return assets have basically realized the full coverage of provisions. The credit cost in 2021 was 0.70%, 28bp lower than that in 2020. PPOP increased by 14.44% year-on-year, lower than the growth rate of pre tax profit (21.02%). Due to the increase of non-performing disposal in 2020 and the steady increase of provision coverage in 2021, the provision began to feed back profits. It is expected that under the trend of lower non-performing generation rate, the space for profit release in the future will continue to open.
The cost income ratio decreased year-on-year, and the capital adequacy indicators improved month on month. In 2021, business and management expenses reached 109727 billion yuan, with a year-on-year increase of 13.42%, of which the growth rate of employee expenses accelerated. 21q4 single quarter business and management fee was 36.430 billion yuan, with a year-on-year increase of 19.71%. The growth rate was significantly widened. Financial technology continued to increase investment in the short term, causing a certain drag on the cost; However, the annual cost income ratio was 33.12%, down 18bp year-on-year. Under the advanced method, the core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio and capital adequacy ratio increased by 35bp, 1.08pct and 1.12pct respectively compared with the end of the third quarter, and the safety margin of capital was sufficient.
Investment advice
China Merchants Bank Co.Ltd(600036) has unique retail advantages. The single quarter interest margin continues to rise against the trend. Throughout the year, credit is “compensated by volume”, the momentum of non interest income is strong, and the transformation of “light bank” and the value chain of “big wealth management” have achieved remarkable results. The “double drop” of non-performing loans was realized, and the provision coverage continued to rise. We use the three-stage DDM model for valuation. Under the absolute valuation method, we predict that the stock price will be raised to 64.23 yuan, corresponding to 2.12xpb; Under the relative valuation method, the share price range was raised to 64.02-64.93 yuan, corresponding to 2.11-2.14xpb, maintaining the China Merchants Bank Co.Ltd(600036) “recommended” rating.
Risk tips
The risks brought by business transformation and the abnormal increase of non-performing loan ratio; Can’t wait for the policy to be implemented.
