\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 036 China Merchants Bank Co.Ltd(600036) )
Recently, China Merchants Bank Co.Ltd(600036) released the 2021 annual report and held a performance conference. The company’s operating performance in 2021 remained excellent as always. Compared with its peers, the company still maintained an absolute leading edge. Previously, the company has published the performance express. The main indicators such as main performance growth, scale growth, asset quality and net interest margin have long been familiar to the market, which will not be repeated here. Readers who need to refer to the end of this report can refer to these charts to show the main performance indicators of the company from 2017 to 2021 in detail.
The following are comments and Prospects on our key concerns.
The bottom of the net interest margin stabilized in 2021, and it is expected that the interest margin in 2022 will be limited by the interest rate cut. In 2021, the company’s net interest margin was 2.48%, which was a phased low since 2020. From the trend, the company’s net interest margin has been stable at 2.48% ~ 2.49% for three consecutive quarters since the second quarter of 2021. From the perspective of both assets and liabilities, the return on assets and the average cost on liabilities have been stable at 3.97% and 1.60% respectively since the second half of 2021. Two years have passed since the interest rate cut in the first quarter of 2020. Therefore, the annual net interest margin of the company in 2021 has fully reflected the impact of the interest rate cut in 2020. During this period, the net interest margin of the company has decreased by about 10bp, which is significantly less than the decline of LPR (1ylpr decreased by 30bp and 5ylpr decreased by 15bp during this period). For the two interest rate cuts since December 2020, we expect that the negative impact on the net interest margin will be limited, mainly due to: 1) the company’s retail loans account for more than 50%, and the decline of asset side yield will be significantly less than that of LPR; 2) the decline of market interest rate and MLF interest rate in the first quarter will help to reduce the debt cost rate. It is expected that the net interest margin of the company will decline slightly by 2bp in the first half of the year. If there is no further interest rate reduction policy, The net interest margin of the company is expected to stabilize in the second half of the year.
The asset quality continues to improve, and the fluctuation of retail asset quality is mainly caused by one-time technical factors. In 2021, the non-performing ratio of corporate loans and retail loans and the provision coverage of non-performing loans continued to improve. Among them, the overall non-performing ratio of the company decreased to a very low level below 1%, and the provision coverage increased to a very high level of 484%. Although the non-performing rate of retail loans announced by the company is the same as that at the end of the previous year, if the adjustment of the recognition time point of overdue credit card loans in 2021 and the reduction of the adverse impact of retail loans overdue for more than 60 days are restored, the quality of the company’s retail assets will still be improved compared with that in 2020. In addition, the slight increase in the proportion of concern loans of the company (the proportion of concern loans at the end of 2021 increased by 3bp to 0.84% compared with that at the end of 2020) and the increase in the scale of overdue loans were also mainly caused by the adjustment of the recognition time point of overdue credit cards. Under the disturbance of real estate, the company is expected to continue to maintain excellent asset quality and performance growth. It is noted that at the end of 2021, the non-performing ratio of corporate loans of the company’s real estate industry increased by 34bp to 1.41% compared with that at the end of June, with a cumulative increase of 1.11 percentage points throughout the year. In terms of scale, the balance of housing related business at the group level with credit risk is about 920 billion yuan, of which the balance of housing related business with credit risk is 511489 billion yuan, an increase of 17.2 billion yuan over the end of 2020, and the balance of housing related business without credit risk is 412078 billion yuan, a decrease of 106.9 billion yuan over the end of 2020. Reviewing the policies successively issued since the fourth quarter of 2021, we believe that the current policy bottom of the real estate industry has appeared, but the market bottom has not been confirmed. We agree with the management of China Merchants Bank that the real estate industry is still in the stage of risk clearing, and the asset quality of the banking industry in the real estate field is still facing certain deterioration pressure. Meanwhile, considering the economic downturn, the overall non-performing rate of the company is expected to rise slightly in 2022, but this does not mean that the asset quality index of the company will inevitably weaken. On the contrary, we are confident that the overall asset quality index of the company will remain excellent, mainly because: 1) the company is more cautious in the selection of real estate customers,
The qualification of real estate customers is relatively high on the whole; 2) The company’s strong provision (including the proportion of loan provision in the real estate industry maintained at more than twice the proportion of loan provision in the whole bank) will give the company more space for write off. We estimate that when the generation of non-performing products increases by 20bp, it is expected that the company’s provision coverage and non-performing rate can still be slightly improved, and the performance can maintain a growth rate of more than 15%.
It is expected that the steady growth will continue and the company’s “buy” investment rating will be maintained. It is estimated that the growth rate of the company’s scale in 2022 will be slightly lower than that in 2021. In 2022, the total assets of the company will increase by about 9% year-on-year, of which the loan balance will increase by about 10%, and the annual net interest margin is expected to remain stable. Under the influence of base factors and capital market factors, it is expected that the handling fees of wealth management business will drag the growth rate of handling fees and commission income down, and the annual net handling fees and commission income is expected to increase by about 13% year-on-year. Thanks to the high-quality customer base and strong provisions, the asset quality is expected to remain stable. It is expected that the annual net profit attributable to shareholders of the parent company will increase by more than 15%. It is expected that the company will maintain steady performance growth from 2022 to 2024, with BVPs of 32.05 yuan, 35.70 yuan and 39.97 yuan respectively, and Pb corresponding to the current share price of 1.43 times, 1.28 times and 1.15 times. Maintain the company’s “buy” investment rating.
Risk tip: asset quality deteriorated significantly, and the growth of operating revenue was significantly lower than expected.
