China Merchants Bank (600036): Earnings margin accelerating margins slightly worrying

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China Merchants Bank (600036): Earnings margin accelerating margins slightly worrying

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China Merchants Bank (600036): Earnings margin accelerating margins slightly worrying

Key investment points Revenues have resumed double-digit growth, and net profit growth has risen quarter by quarter, but interest margins have come under pressure.

China Merchants Bank’s net profit attributable to mothers increased by 14 in the first three quarters.

The growth rate increased by 6% from quarter to quarter. The main driving factors for profit 佛山桑拿网 growth came from: (1) the growth of interest-earning assets accelerated, and the margin hedged the impact of narrowing interest rates on interest income.

(2) Ten-year growth in non-interest income 8.

9%, which is a clear rise in the growth rate of program fee income in the quarter, the growth rate reached 17 in the third quarter.


(3) Credit cost savings (YoY + 0.

3%) also made a positive contribution to profit growth.

(4) Effective control of actual tax rates.

From the perspective of the breakdown of income structure, the improvement in the growth rate of interest rate income is mainly affected by the narrowing of interest margins; in terms of fees, the growth rate has improved quarter by quarter, among which the wealth management business income has resumed growth in a single quarter, and the impact of new asset management regulations is expectedInitial elimination.

In terms of cost, fintech continued to increase spending, driving cost-to-income ratio uplink; thanks to the continuous improvement of asset quality, the value of credit relief increased by only 0.

3%. Impairment-provided savings make a positive contribution to profit growth.

In terms of pricing, the net interest margin in the first three quarters was 2.

65%, single quarter NIM fell 12bps to 2.

57%, mainly due to the downward pressure on asset-side pricing and rising pressure on deposit costs.

The scale of expansion has accelerated, loans and debt investment have grown rapidly, and the amount of deposits has increased.

Asset expansion accelerated in the third quarter, and the quarterly growth rate increased further from the second quarter.

2pcs to 12.

2%, the total asset size reaches 7.

3 trillion.

The structure continued to be optimized. The main investment was loans and bond investments. Loans increased by 529.2 billion compared with the beginning of the year, and the proportion of loans increased to 60%.

In terms of debt, the growth of deposits in the third quarter was better than in the same period of previous years, but the cost of deposits has increased, and it is expected to absorb some of the relatively high interest rate resistance.

The non-performing rate dropped further to 1.

19%, provision coverage increased to 409%, and asset quality continued to solidify.

NPL ratio at the end of the third quarter 1.

19%, a decrease of 4bps from the previous quarter, and the provision coverage ratio was 409.

41%, up 15 units from the end of last year.

Our estimated annualized comprehensive credit cost1.

50%, with a poor net generation rate (TTM) of 0.

47%, still maintained at the lowest level, asset quality maintained a good trend.

We maintain our previous view. The company’s asset quality has been consolidated in the previous period, and the level of provision has been tilted. Other joint-stock banks have a confrontational safety pad. In the future, credit costs will also be relatively stable due to the reduced generation rate. Impairment savings will continue to feed back profits.

In terms of capital, the ending capital adequacy ratio and core tier 1 capital adequacy ratio were 15 respectively.

27% and 11.


We slightly adjust the company’s profit forecast, and expect EPS in 2019 and 2020 to be 3 respectively.

59 yuan and 4.

03 yuan, the final net asset is expected to be 22 at the end of 2019.

83 yuan, calculated at the closing price of 2019-10-30, which corresponds to 1 at the end of 2019.55 times.

We maintain our prudent overweight rating on the company.

Risk Warning: Asset quality fluctuates more than expected, middle income and scale expansion