\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 036 China Merchants Bank Co.Ltd(600036) )
On April 22, China Merchants Bank Co.Ltd(600036) released the first quarter report of 2022. During the reporting period, the operating revenue was 91.990 billion yuan, yoy + 8.5%, and the net profit attributable to the parent company was 36.022 billion yuan, yoy + 12.5%.
The fundamentals were stable and supported, and the growth gap between revenue and profit narrowed. In the first quarter of 2022, the year-on-year growth rates of China Merchants Bank Co.Ltd(600036) revenue, profit before provision and net profit attributable to parent company were 8.5%, 8.7% and 12.5% respectively, and the growth rates decreased by 5.5, 5.8 and 10.7pct respectively compared with 2021. Under the influence of the company’s forward-looking and prudent provision for loss, the credit cost (annualized) increased by 0.32pct to 0.81% year-on-year, and the growth difference of revenue and profit narrowed to 4.0pct.
Net interest income maintained a high growth rate, scale expansion gradually returned to normal, and the net interest margin increased by 3bp quarter on quarter. 1) Asset side expansion is “stable in volume and price”, and the proportion of loans has been generally stable since 2019 China Merchants Bank Co.Ltd(600036) 1q interest bearing assets and loans grew by 8.8% and 8.4% year-on-year respectively, with a growth rate of 1.7% and 2.4pct lower than that at the end of the previous year; The proportion of loans increased by 0.59pct to 61.8% compared with the end of the previous year, and the proportion of loans has been generally stable since 2019. In terms of the new credit structure in the first quarter, the ratio of corporate to retail was roughly 2.3:1. 1q loan yield increased 1bp quarter on quarter to 4.68%. 2) The ability to acquire core liabilities is strong, and the growth rate of deposits is 1.9pct to 14.6% quarter on quarter. By the end of 1q, the proportion of demand deposits had decreased by 2.7pct to 63.7% compared with the end of the previous year, and the proportion of retail deposits had increased by 0.4pct to 36.5% compared with the end of the previous year. In terms of debt cost, the cost ratio of interest bearing liabilities decreased by 1bp to 1.58% quarter on quarter, and the cost ratio of deposits increased by 5bp to 1.46% quarter on quarter. The change in the volume and price of deposits may be related to the migration of AUM of some retail customers from wealth management to deposit competing products such as large certificates of deposit under the background of intensified fluctuation of net value of wealth management.
Non interest income has slowed down in stages, the number of retail customers has increased steadily, and the cornerstone of wealth business has been consolidated China Merchants Bank Co.Ltd(600036) 1q non interest income increased by 6.5% year on year; Among them, the net income from handling fees and commissions increased by 5.5% year-on-year. Affected by the relative downturn in the capital market, wealth management income decreased by 11.1% year-on-year. We believe that the customer base is the core competitiveness of retail business. The number of China Merchants Bank Co.Ltd(600036) retail customers has maintained a good growth trend under the condition of high base, and the customer base structure has been continuously optimized, laying a solid foundation for the development of big wealth management business. Although the consignment business will rise and fall due to the periodic changes in the capital market, the wealth management business has huge space in the medium and long term.
The non-performing rate is still below 1%, and the real estate risk is relatively controllable. Affected by the increase of new non-performing loans generated from real estate and the increased risk of retail customers under the influence of the epidemic, the non-performing rate increased by 3bp to 0.94% compared with the end of last quarter, but the absolute level is still low. The detailed data related to real estate shows that the risk of real estate related assets is controllable.
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 recent news about the personnel changes of the leadership has caused periodic pressure on the stock price. We believe that the impact of short-term events will not affect the company’s strategic determination and stable business expectations. 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. The EPS forecast for 202224 is maintained at 5.74 yuan / 6.70 yuan / 7.72 yuan respectively, and the corresponding Pb valuation is 1.28, 1.12 and 0.97 respectively, maintaining the “buy” rating.
Risk tip: if the epidemic intensifies macroeconomic pressure, bank credit demand and asset quality may be under pressure.
