China Merchants Bank's outstanding performance in 2021, asset quality and risk offset ability to maintain industry leadership. The company has obvious advantages in negative management. Under the guidance of the "Great Wealth Management value cycle chain", various businesses are closely integrated and coordinated development, and the performance is expected to improve steadily and maintain the "buy" rating.
Matters: China Merchants Bank released the 2021 results KuaiBao, with an annual operating income of 331.234 billion yuan (unaudited, the same below) and a net profit of 119.922 billion yuan, which was + 14.03% and 23.20% respectively compared with the same period last year; the non-performing loan ratio decreased by 0.16pct to 0.91% compared with the same period last year.
Revenue and profit growth accelerated. China Merchants Bank's operating income in 2021 was + 14.03% compared with the same period last year (+ 13.54% in the first three quarters), and its net profit was + 25.61% year-on-year (+ 22.21% in the first three quarters). The net interest income in the fourth quarter was + 3.87% month-on-month and + 14.59% compared with the same period last year, which is presumed to contribute to the growth of deposits in the fourth quarter and promote the rapid growth of revenue in the fourth quarter. Year-on-year non-interest income increased by + 20.73% over the same period last year, driven by the "big wealth management value cycle chain".
In the fourth quarter, the expansion of the table was positive, and the growth of deposits was bright. At the end of 2021, the company's total assets were 9.27 trillion yuan and total liabilities were 8.4 trillion yuan, which was + 3.98% and 3.49% respectively at the end of the third quarter compared with the end of the third quarter, and the expansion of the table in the fourth quarter was positive. At the end of the year, the deposit balance was 6.35 trillion yuan, up from + 5.57% at the end of the third quarter and + 12.77% from the same period last year, exceeding the growth rate of total liabilities and loans.
The quality of assets remains excellent. At the end of 2021, the company's non-performing loan ratio continued to decline by 0.02pct to 0.91% from the end of the third quarter, and the asset quality of 0.16pct decreased at the end of last year to maintain the leading level of listed banks. The provision coverage ratio decreased slightly by 1.80pcts compared with the third quarter and increased by 3.66pcts compared with the end of last year; the loan provision ratio decreased slightly by 0.1pct compared with the end of the third quarter and 0.64pct compared with the end of last year. The provision coverage ratio is related to the decrease in the loan provision ratio or the decrease in loan loss provisions, which is speculated to continue the trend of loan impairment loss reversal in the third quarter. Considering the impact of the epidemic on asset quality in 2020, the company significantly increased its provision. As asset quality stabilized in 2021, the company steadily reduced its provision for loan losses, but on the whole, the company maintained an industry-leading risk offset capability.
Risk factors: macroeconomic growth fell faster than expected; asset quality deteriorated significantly.
Investment advice: China Merchants Bank's outstanding performance in 2021, asset quality and risk offset ability to maintain industry leadership.
The company has obvious advantages in negative management. Under the guidance of the "Great Wealth Management value cycle chain", various businesses are closely integrated and coordinated development, and the performance is expected to be steady and good. Taking into account that the company's 2021 performance is better than expected, slightly adjust the company's 2021, 22 EPS forecast to 4.61 EPS 5.28 yuan (the original forecast 4.42 soybean 5.30 yuan), the current A-share price corresponds to the 2022 1.46xPB, maintaining the company's target price of 64.00 yuan, corresponding to the 2022 1.95xPB, maintaining the "buy" rating.