\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 036 China Merchants Bank Co.Ltd(600036) )
China Merchants Bank Co.Ltd(600036) in the first quarter of 2022, the growth rate of net profit attributable to the parent company was 12.52%, of which the expansion of scale, the reduction of the pressure on provision provision and tax preference were the main driving factors, while the slowdown of non interest income growth and the narrowing of net interest margin made a negative contribution to the performance growth.
\u3000\u30001. The net interest margin rose 3 BP month on month, better than the market expectation, and narrowed slightly compared with the same period, dragging down the net interest income. Driven by stable asset side yield and improved debt cost, the China Merchants Bank Co.Ltd(600036) net interest margin in the first quarter of this year reached 2.51%, up 3 BP month on month, improving for three consecutive quarters. Due to the high base in the first quarter of last year, the net interest margin narrowed 1bp year-on-year, dragging down the growth of net interest income.
\u3000\u30002. The growth rate of medium income was lower than expected, which was a drag on revenue. Mainly due to the continuous downturn in the capital market, the income growth of all lines of China Merchants Bank‘s big wealth management has decreased to varying degrees, which is the main factor hindering the growth of medium income. Although the market has had some expectations before, the actual performance of China Merchants Bank is still weaker than the market expectation. Looking ahead, the capital market may remain volatile in the short term, and it is expected that China Merchants Bank Co.Ltd(600036) big wealth management business will remain under pressure in the short term.
\u3000\u30003. The fluctuation of asset quality increased, and the generation rate of non-performing assets increased. Affected by the risk exposure of high debt real estate enterprises and individual poorly managed company customers, the asset quality of the real estate industry, water conservancy, environment and public facilities management industry has deteriorated. In terms of retail credit, the epidemic in China has spread in many places, which has a great impact on small and micro enterprises, individual industrial and commercial households and residents’ employment and income. The generation rate of non-performing credit card loans has increased, and the future evolution trend is still worthy of special attention.
\u3000\u30004. The growth rate of retail business indicators decreased slightly, and the quality of customer base improved steadily. The sharp fluctuations in the capital market in the first quarter of this year also put pressure on the growth of retail customers and AUM of China Merchants Bank. The growth rate of some retail business indicators decreased, which should be caused by cyclical factors. AUM per customer continues to improve, and the quality of customer base is still improving. Looking forward to the future, although the big wealth management business faces the pressure of slowdown in growth in the short term, it is more caused by the increased volatility of the capital market, which will still be the core advantage of China Merchants Bank in the long run.
Overall, the highlights of China Merchants Bank Co.Ltd(600036) first quarter report mainly lie in the continuous improvement of net interest margin month on month and the improvement of retail customer group quality, while the shortcomings lie in the slowdown of wealth management business and the increase of asset quality fluctuation. Superimposed with the impact of the change of the president, the short-term fluctuation of the company’s share price may increase; However, in the medium and long term, the stock price is basically determined by fundamental factors. We expect that the core competitiveness of China Merchants Bank will not change, and the medium and long-term investment value will be prominent.
Investment suggestion: we expect the company’s revenue growth rate to be 10.8% and net profit growth rate to be 16.94% in 2022. The six-month target price is 65.52 yuan, equivalent to 2.24pb in 2021.
Risk tip: the development of wealth management business is less than expected, and the asset quality is worse than expected
