China Merchants Bank (600036) Quarterly Report Review: Profitability Gains Continued Optimization of Asset Quality

Event: China Merchants Bank announced the third quarter report of 19, 19Q1-3 net profit attributable to mother increased by 14.

63%.

Revenue rises by 10 per year.

36%, net interest income increased by 11 in ten years.

2%, net fee income increased by 7 in ten years.

9%.

Total assets 7.

3 trillion (+8.

3%, earlier), of which loans increased by 13 earlier.

46%; deposits increased by 8 compared with the beginning of the year.

25%.

NPL ratio 1.

19% (-4bps, QoQ); provision coverage rate is 409.

4% (+ 15pct, QoQ); Q1-3 annualized ROE19.

19% (+0.

12pct, year on year).

Ping An’s point of view: The performance is stable and the provision time is accrued, and the profit growth rate is increased quarter by quarter.

4%, an increase of 0 from the first half.

8pct, █ net income growth was slower than 1H19 and slightly converged2.

3pct to 11.

In the case of 2%, the rapid increase in revenue was due to the increase in program fee income, which led to the growth of non-interest income, and the fee income growth rate in 19Q1-3 was 7.

4%, an increase of 3 from the first half.

4pct, single season growth rate is as high as 17.

3%, or due to the restoration of wealth management business performance, the subsequent opening of subsequent wealth management subsidiaries, the income may be further boosted.

Under the stable revenue, thanks to the continuous improvement of asset quality and the provision of relief pressure, CMB’s Q3 single quarter asset impairment losses have decreased by 11% (Q1 and Q2 were 17 respectively).

5%, -5.

7%), the decline in credit costs drove the first three quarters of net profit growth earlier than 1H19 and increased by 1.
.

5 points to 14.

6%. Since 19 years, the growth rate has increased quarter by quarter.

The company has an annualized ROE of 19.

19% industry-leading, profitability has further increased.

Credit grew steadily, the interest rate spread fell. The company’s asset expansion expanded steadily in the third quarter, and the total asset size expanded by the end of the middle period1.

6%, of which loans expanded by 3% (Q2 expanded by 5%), while the assets of the same industry slightly contracted, the growth rate of investment assets increased slightly, the overall asset structure tilted towards high-yield credit, the net loan amountThe ratio is 57.

4%, an increase of 1 earlier.

8 units.

On the debt side, the company’s deposits in the third quarter expanded slightly from the end of the middle period1.

4%, an improvement from the second quarter, but the debt end ratio still remained at a high level of more than 70%; in the third quarter, 杭州夜网论坛 bond issuance accelerated, and the scale expanded quarter-on-quarter.
5% (Q2 increased by 9 compared with the previous quarter.
9%).

The company disclosed the first three quarters of net interest margin2.

65%, a year-on-year increase of 11BP, Q3 single quarter net interest margin is 2.

57%, down 12BP from the previous month.

The interest rate spread continued to decline from the previous quarter. In view of the negative structure of capital, there are several aspects of the pressure on loan yields, the rise in the cost of deposits, and the increase in the proportion of high-interest debt.

However, interest rate convergence is an industry trend. CMB’s negative capital structure is in sync with its peers, and interest rate differentials are still relatively high.

NPL ratio went down, asset quality continued to be optimized. The company’s asset quality continued to solidify in the third quarter, and the NPL ratio dropped by another 4BP to 1 from the previous quarter.

19%, in the case of slow release of adverse pressure, the CMB provisions in the third quarter of the provisions of 11 less.

3% (Q1, Q2 are 17 respectively.

5%, -5.

7%), but the provision coverage ratio naturally increased by 15 percentage points to 409%, and the loan-to-loan ratio increased slightly by 2BP to 4.

89%, the margin of safety has been further improved.

Investment suggestion: The company’s third-quarter performance is stable and progressive. Although the decline in interest rates has dragged down the revenue growth rate, the provisioning speed under the release of adverse pressures will help release performance, and profit growth will continue to rise.

The company’s asset allocation is prudent, its quality is continuously optimized, and its high provision provides performance flexibility.

According to the company’s three quarterly report, we slightly adjusted our profit forecast and expected the company’s net profit growth rate to be 15 in 19/20.

3% / 14% (was 14).

2% / 13.

2%), the current sustainable corresponding 19/20 PB is 1.
.

61/1.

43, PE is 10.

08/8.

83. Maintain the company’s “Highly Recommended” rating.

Risk reminders: 1) Asset quality is affected by economic expectations that exceed expectations, and credit risk is exposed centrally.

If the macro-economy exceeds expectations, it will inevitably cause the industry’s overall asset quality pressure and affect the disposal and recovery of non-performing assets, thereby affecting the industry’s profit growth rate.

2) The policy budget is stronger than expected.

Under the background of deleveraging and risk prevention, the breadth and depth of industry supervision have been continuously strengthened. If the overall supervision trend or the policy change in a certain area exceeds expectations, it may adversely affect the stability of the industry.

3) Systemic risks arise from market decline.

Bank stocks are an important component of large-cap stocks, and their overall rise and fall are closely related to market investment style.

If there is systemic risk in the market situation and the overall market is expected to decline, it may drive the industry to decline.