China Merchants Bank (600036) Quarterly Report Review: What do you think of the third quarterly report of China Merchants Bank?

China Merchants Bank (600036) Quarterly Report Review: What do you think of the third quarterly report of China Merchants Bank?

Event: On the evening of October 30, China Merchants Bank disclosed 3Q19 results: revenue 2077.

300 million, a year-on-year increase of +10.

36%; net profit attributable to mother 772.

3.9 billion, a year-on-year increase of +14.

63%; annualized weighted ROE amounts to 19.


As of the end of September 19, the scale of assets was 7.

31 trillion yuan, non-performing 北京桑拿洗浴保健 loan ratio1.


  Earnings growth has risen, and ROE leads the market leader in banking stocks, the third-quarter report of China Merchants Bank.

Although the growth rate of net profit increased (14 in 3Q19.

6% vs 1H19 of 13.

1%), but the 19Q3 net interest margin fell as expected, which also deepened the market’s move towards the future.

Overall, performance is in line with market expectations.

In the third quarter of 19th, the revenue growth rate slightly increased, mainly due to the contribution of the improvement of non-interest income growth, while the growth of net interest income was replacing.

  As a benchmark for retail banking, China Merchants Bank has expanded the traditional old path of “credit expansion-refinancing-credit expansion” and has the characteristics of light capital.

In the third quarter of 19, the revised ROE reached 19.

2%, leading level for A-share listed banks.

Taking into account the 3Q19 capital adequacy ratio of 15.

44%, which is higher than the reduction in regulatory requirements, and the endogenous capital is replenished quickly, and the dividend ratio may be increased in the future.

  The asset structure has been optimized, and the net interest margin has peaked in stages. However, the loan ratio of China Merchants Bank is significantly higher than the industry average, but its loan ratio is still rising slowly, from 52 at the end of 14 years.

1% rose to 61 in 3Q19.


On the debt side, 3Q19 deposits accounted for 71.


  3Q19 net interest margin 2.

65%, 5BP lower than the previous 1H19; 19Q3 single quarter net interest margin was 2.

57%, a decrease of 12BP month-on-month, confirming the market’s view on the staged peak of China Merchants Bank’s net interest margin.

The decrease in net interest margin in the third quarter of 19 was mainly due to the decline in loan yields and the rise in deposit costs.

Considering that the loan interest rate is still falling, the net interest margin may continue to decline slightly in the future.

  Asset quality remains outstanding, and loan allocations remain superior to high asset quality.

The non-performing loan ratio in the third quarter of 19 was only 1.

19%, 4BP lower than 1H19.

1H19 focuses on the loan ratio1.

30%, overdue loan rate1.

56%, less adverse pressure in the future.

In addition, short-term China Merchants Bank has severely reduced the proportion of loans to non-performing high-industry industries such as manufacturing, and the relationship between asset quality and economic cycles has been improved due to credit structure adjustment and optimization, and future non-performing concerns are relatively small.

  The loan-to-loan ratio is high.The loan-to-loan ratio in the third quarter of 19 reached 4.

89%, up 1BP earlier, maintaining a high level.

If it will be higher than 2.

The provision of 5% loan-to-loan ratio is restored to net assets, currently estimated to be only 1.

34PB (lf).

  Investment suggestion: benchmark for retail banks with a target price of 43.

As a leading retail bank at RMB05 / share, China Merchants Bank has a relatively high proportion of retail business and prudent risk control. Its performance is less affected by the economic cycle, its performance continues to grow steadily, and its ROE is high and stable.

Although the retail business of China Merchants Bank is still large, both the number of retail customers and retail AUM have maintained a high growth rate.

However, due to the impact of deposit disintermediation and the implementation of LPR reform, it is expected that the net interest margin will gradually peak.

  Due to the early termination, it is estimated to switch to 2020 and give China Merchants Bank a target assessment1.

7 times 20-year PB, corresponding to a target price of 43.

05 yuan / share, maintaining the rating of overweight.

Everyone’s life still holds nearly 10% of China Merchants Bank, or continue to reduce its holdings, which may gradually suppress short-term performance.

  Risk reminder: Net interest margin drops sharply, and asset quality deteriorates.