Key investment points: CMB's 2023 revenue decreased by 1.64% year on year, and net profit to mother increased 6.22% year on year. The company's bad balance and non-performing rate on public real estate declined, and the asset quality of the retail sector was slightly disturbed. The company's dividend ratio has increased from 33% to 35%. We believe that the company is expected to maintain a high dividend ratio and maintain a “superior to the market” rating.
The share of concerned loans increased month-on-month, and the non-performing balance and non-performing rate for public real estate declined. At the end of 23, the share of concerned loans was 1.10%, up 9 bps month-on-month from 23Q3, and the share of overdue loans increased by 1 bps to 1.26% month-on-month compared to 23Q3. We think it may be related to a marginal increase in retail risk. The non-performing rate of personal housing loans was 0.37%, up 2 bps from 23Q2, the overdue rate was 0.54%, and 6 bps higher than 23Q2. The credit card loan non-performing ratio was 1.75%, an increase of 7 bps compared to 23Q2. The non-performing ratio of small and micro loans rose slightly to 0.61% compared to 23Q2. At the end of 23, the company's bad balance and defect rate for public real estate both decreased compared to 23Q2, and the defective rate decreased by 26 bps to 5.26% compared to 23Q2.
The dividend ratio increased from 33% to 35%, and judging from the degree of capital accumulation, it is expected that the dividend ratio will remain high. CMB's core Tier 1 capital adequacy ratio increased by 5 bps to 13.73% compared to '22, and is expected to continue to be at the top of listed banks.
We believe that CMB's capital adequacy ratio is expected to increase further after the implementation of the new capital regulations, and is capable of maintaining a 35% dividend ratio.
The conversion of settlement customers to wealth customers has paid off. The company's retail AUM was 13.32 trillion yuan, up 9.88% from '22, exceeding the year-on-year growth rate of total assets. Retail wealth products held more than 50 million customers, up 19.13% from the end of '22.
The trend of regular and long-term deposits makes it difficult to reduce deposit costs. The share of CMB time deposits increased further to 45.1% compared to 22 years, and the cost ratio of corporate time deposits and personal time deposits was basically the same as in '22. The average term of CMB deposits has been lengthened. The proportion of deposits from 3 months to 1 year and the share of deposits from 1 to 5 years have all increased compared to '22.
Investment advice. We forecast EPS to be 6.08, 6.46, and 6.87 yuan in 2024-2026, with net profit growth rates of 5.80%, 6.15%, and 6.26%. We obtained a reasonable value of 36.59 yuan based on the DDM model (see Table 2); according to the PB-ROE model, the 2024E PB valuation was 1.00 times (0.43 times that of a comparable company), and the corresponding reasonable value was 40.83 yuan. Therefore, the reasonable value range is 36.59-40.83 yuan (corresponding to 2024 PE is 6.02-6.71 times, corresponding PE is 4.72 times that of the same company), maintaining the “superior to the market” rating.
Risk warning: The solvency of enterprises has declined, asset quality has deteriorated dramatically; financial supervision policies have undergone major changes.