\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 036 China Merchants Bank Co.Ltd(600036) )
Event overview
China Merchants Bank Co.Ltd(600036) released the first quarterly report of 2022: in 2022q1, the operating revenue was 91.990 billion yuan (+ 8.54%, YoY), the operating profit was 44.358 billion yuan (+ 10.90%, YoY), and the net profit attributable to the parent company was 36.022 billion yuan (+ 12.52%, YoY); At the end of the first quarter, the total assets were 9.42 trillion yuan (+8.66%, yoy; +1.80%, QoQ), deposits were 6.68 trillion yuan (+14.64%, yoy; +5.25%, QoQ), loans were 5.76 trillion yuan (+8.39%, yoy; +3.38%, QoQ), and retail aum11 34 trillion yuan, an increase of 5.39% over the end of the previous year. Net interest margin 2.51% (- 1bp, YoY); The non-performing loan ratio is 0.94% (+ 3bp, QoQ), the provision coverage ratio is 462.68% (-21.19pct, QoQ), and the allocation loan ratio is 4.35% (-0.07pct, QoQ); Capital adequacy ratio 17.29% (-0.19pct, QoQ); Annual roe19 24%(-0.30pct，YoY)。
Analysis and judgment:
Q1 interest collection business remained stable, the growth of income in wealth category slowed down due to the overall impact of the industry, and retail AUM still expanded steadily
In the first quarter, the revenue and PPOP of CMB were + 8.5% / + 8.8% year-on-year respectively, and the growth rate of revenue was lower than about 14% of the previous year. On the one hand, the net interest income + 10% was basically the same as that of the previous year, and the volume parity at the beginning of the year was stable to ensure the stability of interest collection business; On the other hand, although the base effect of trading non interest income is absent and the growth rate drops from the high level, it still achieves a year-on-year growth rate of 10%. Therefore, the performance of the revenue side is mostly dragged down by the handling fee income, which is only + 5.5% year-on-year in Q1. Mainly due to the impact of the downturn of the capital market in the first quarter, the overall wealth management revenue is – 11% year-on-year, including the handling fee income of agency funds and trusts, which has dropped by nearly half year-on-year, the income of agency precious metals business has basically returned to zero, and only the rapid growth of agency insurance and entrusted wealth management income forms a supplement. In 2021, the income from selling funds accounted for nearly one-third of the company’s wealth management income. The diversified structure was more balanced than that of the same industry. The company’s channel and customer group advantages also ensured the growth of other wealth management business income.
Meanwhile, CMB continued to maintain a steady pace of off balance sheet retail expansion. In the first quarter, retail AUM reached 11.34 trillion yuan, with a year-on-year growth rate of + 18.2%, driving retail AUM / total assets to rise 4pct to 120% over the previous year. On the one hand, in addition to the increase of 146.8 billion yuan in personal deposits, the total scale of asset management of four subsidiaries, including China Merchants Bank financial management and China Merchants Fund, increased by about 100 billion yuan in a quarter; On the other hand, 72% of the increment came from customers above sunflower, driving the overall average household AUM to increase by about 2200 yuan to 64400 yuan month on month compared with the end of the previous year. However, compared with the stock balance and 82% of the increment in 2021, the contribution of the basic retail customer group increased. The number of private bank customers and AUM both achieved a year-on-year growth rate of 17%, which slowed down slightly compared with the previous year, and the average household AUM increased slightly compared with the previous year. When the growth rate of revenue slowed down, the impairment loss in the first quarter was withdrawn 4.8% more than that in the same period of last year, and the strength margin rebounded (the withdrawal scale in 2021 was + 2% year-on-year), and the proportion of credit withdrawal rebounded. After significant withdrawal in the previous year, the withdrawal scale in the first quarter decreased year-on-year. Overall revenue growth slowed and credit costs rose. Q1 net profit growth was + 12.5% year-on-year, 10.7pct lower than that in 2021.
In the first quarter, retail loans were weak, and the interest margin rebounded month on month under the optimization of deposit driven debt structure
At the end of the first quarter, the total assets increased by 8.7% year-on-year, slowing down from the 10.6% margin of the previous year. The growth rate of loans was basically the same as that of total assets, Q1 was + 8.4% year-on-year, and investment assets were mainly allocated (year-on-year + 10.9%). The daily average balance of corresponding asset side loans decreased slightly by 0.8pct compared with the same period of the previous year. Under the background of weak financing demand in the first quarter, the quarterly loan increment was 188.1 billion yuan, only 66% of that in 21q1. From the comparable data of the parent bank, the investment was mainly to the public, and the year-on-year growth rate of retail loans was still faster than that of the public. However, from the perspective of chain comparison, the growth rate of scale was slower than + 1.3% at the beginning of the year, accounting for 21% of the total increment of 22q1 loans, far lower than 45% in the same period of the previous year, and the proportion of ticket and coupon investment increased significantly. Among retail loans, small and micro enterprises and consumer loans still maintained double-digit year-on-year growth, with the mortgage scale slightly increased by 0.7% compared with the beginning of the year, while the credit card loan scale decreased by 2% compared with the beginning of the year. Under the guidance of the policy of increasing support for entities, the public loan industry in the first quarter basically achieved a steady expansion compared with the beginning of the year.
Deposits performed well in the first quarter, with a month on month ratio of + 14.6% / + 5.3% respectively, further accelerating compared with the same period of the previous year, driving the proportion of debt side deposits to increase by 4.7pct to 78.9% year on year, and the proportion reached a high of 80.8% under the caliber of daily average balance. Although the deposit interest rate increased by 7bp year-on-year due to the deepening of deposit regularization, the debt structure optimization and the active debt interest rate fell, and the debt cost rate increased by only 1bp year-on-year in the first quarter. Superimposed on the slowdown in the release of retail loans on the asset side, the loan yield decreased by 5bp year-on-year, the yield of total interest bearing assets decreased by 4bp, and the net interest margin of the company in the first quarter was 2.51%, only – 1bp year-on-year. However, on a month on month basis, Q1 interest rate spread was + 3bp on a month on month basis compared with the fourth quarter of last year, which was mainly contributed by the debt side. On the one hand, the loan yield stabilized and rebounded on a month on month basis, and 4bp led the asset yield to be flat in the third and fourth quarter of last year. On the other hand, under the optimization of debt structure, the debt cost ratio also fell by 2bp on a month on month basis.
In the first quarter, it was confirmed that the risks in the real estate field were cleared, and the provision rate for non-performing assets fell
At the end of the first quarter, the non-performing rate rose by 3bp to 0.94% month on month, still at a low level in the industry. When the non-performing rate of individual loans of the parent bank was flat month on month, the non-performing rate of corporate loans increased by 2bp month on month, mainly because the non-performing rate of the real estate industry increased significantly by 1.18pct to 2.57% month on month. The risk in the real estate sector was in the release stage, and the corresponding companies accounted for the proportion of corporate real estate loans through the pressure drop in the balance sheet, And reduce the non loan business scale that bears credit risk and the business scale that does not bear risk, so as to control risk exposure. The leading indicators also showed an upward trend. The proportion of attention categories rose for three consecutive quarters, Q1 + 12bp to 0.96% month on month, and the overdue rate + 6BP to 1.09% month on month. However, the identification of non-performing assets became more cautious. The deviation degrees of expected 90 + / non-performing assets and overdue 60 + / non-performing assets disclosed were 58.5% and 74.6% respectively, which was further reduced compared with the beginning of the year. Therefore, from the perspective of generation, the disclosed Q1 annualized non-performing generation rate increased from + 21bp to 1.16% year-on-year. For the public sector, the non-performing generation of real estate increased, and for the retail sector, especially the non-performing generation of credit cards, there are also reasons for the stricter identification time point and standard. Accordingly, China Merchants Bank increased the recognition and clearing of non-performing assets in the first quarter, and the provision rate fell by 21.2pct to 462.68% month on month.
Investment advice
Affected by the macro-economy and capital market, the pace of table expansion and performance growth of China Merchants Bank in the first quarter slowed down, the retail loan investment and wealth business were subject to certain constraints, and the risk of asset quality was also exposed. However, we believe that the operation of the company in the first quarter also shows that under the environment of industrial depression, the basic advantages of retail banks such as customer base and channels, as well as the continuous promotion of big wealth management strategy, and strengthen the real reflection of business risks, which is conducive to the stabilization and decline of subsequent credit costs after clearing in time. At present, the company’s valuation has been corrected due to the change of president, but we believe that China Merchants Bank has clearly established its advantages in deep-seated fields such as strategy first, organizational structure and corporate culture since 2010, so the strategic guidance is more powerful for the development of the company than its peers; On the other hand, in the future, wealth management, as an engine driving medium and long-term performance development, will still ensure the improvement of the company’s customer acquisition, AUM and asset management capabilities, and maintain the company’s competitive advantage.
In view of the performance of the first quarterly report, we maintain the forecast of the company’s revenue of 365.9/4124469.5 billion yuan in 22-24 years, and the forecast of net profit attributable to the parent company of 137.9/160.9/188.8 billion yuan, with a corresponding growth rate of 15.0% / 16.6% / 17.3%; Maintain eps5 for 22-24 years The forecast of 40 / 6.32 / 7.42 yuan corresponds to the closing price of 42.5 yuan / share on April 22, 2022, and Pb is 1.30/1.15/1.01 times respectively. At present, after the valuation falls, the follow-up repair space is improved and the “buy” rating of the company is maintained.
Risk tips
1. The risk that the future repair of the overall economy is less than expected and the credit cost increases significantly;
2. Major business risks of the company.
