Introduction to this report:
CMB's revenue and profit growth rate in 2023 was in line with expectations. The overall asset quality was stable. The dividend ratio increased by 2 pct to 35% compared to 2022, increasing efficiency and quality. Maintain the target price of 41.1 yuan, corresponding to 1x PB in 2024, and maintain an increase in holdings rating.
Key points of investment:
According to the 2023 financial report and 2024 credit volume and price trend forecast, the 2024-2026 net profit growth forecast is 3.5%, 5.7%, and 6.0%. The corresponding BVPS is 40.86 (-0.23), 45.17 (-0.75), and 49.68 (new) yuan, maintaining the target price of 41.1 yuan, maintaining an increase rating.
23Q4 revenue resilience was better than expected, mainly due to a 76.2% year-on-year increase in other non-interest rates, hedging interest spreads and revenue delays. Squeezed by factors such as stock mortgage interest rate adjustments, weak demand for loans in exchange for volume, low degree of corporate capital activation, and the strengthening of the wealth attributes of residents' savings deposits, the net interest spread in Q4 fell 7 bps to 2.04% month-on-month, reaching a year-on-year decline of 25 bps. Considering the possibility of loan repricing and potential interest rate cuts in 2024, and the reduction in banking insurance channel rates, it is expected that revenue will continue to be under pressure, but the single-quarter growth rate is expected to correct in the second half of the year.
Overall asset quality was stable, and declining credit costs supported a 5.2% year-on-year increase in profit in 23Q4.
Bad loans to public real estate declined for two consecutive quarters, and the quality of retail assets continued to be under pressure but still superior to the level at the beginning of the year. Overall, the defect rate at the end of Q4 decreased by 1 bp to 0.95% compared to the end of Q3, and the provision coverage rate decreased by 8 pct to 438% compared to the end of Q3, which remained stable.
The dividend rate increased by 2 pct to 35% compared to 2022, stabilizing and consolidating the bastion balance table.
At the end of the year, the CMB scale growth rate slowed further compared to Q3, but the structure improved markedly. The share of notes decreased by 0.9 pct compared to Q3, and the core Tier 1 capital adequacy ratio increased by 11 bps to 13.73% compared to the beginning of the year.
Planned loans increased by 8% in 2024 to seek dynamic and balanced development of quality, efficiency and scale.
Risk warning: Demand recovery fell short of expectations; retail loan risk exposure exceeded expectations.