招商银行(600036):高质量发展稳步推进 大财富管理未来可期

China Merchants Bank (600036): High-Quality Development Steadily Promotes Big Wealth Management Can Be Expected in the Future

信達證券 ·  03/27  · Researches

Incident: Recently, China Merchants Bank disclosed its 2022 annual report: return net profit +15.08% year on year (+14.21% in the first three quarters); operating income +4.08% year on year (+5.34% in the first three quarters); annualized weighted ROE for the whole year was 17.06%, +10 bps year on year.


Revenue is relatively stable, and profit growth is rising by leaps and bins. The year-on-year growth rate of China Merchants Bank's revenue in 2022 fell 1.25 pct to 4.08% from the previous three quarters; the year-on-year growth rate of net profit of the mother increased 87 bps to 15.08% from the previous three quarters, ranking second among listed stock banks with disclosed data. The compound annual growth rate for two years was as high as 19.07%. Profits have maintained relatively rapid growth, mainly due to backfeeding of provisions and scale expansion; while the further increase in profit growth is mainly due to cost optimization and increased provision contributions.

The scale is expanding at an accelerated pace, and deposit growth is impressive. The year-on-year growth rate of total assets at the end of 2022 was 77 bps to 9.62% compared to the end of Q3, reaching a new level of 10 trillion dollars. Under the advanced law, the company's core Tier 1 capital adequacy ratio reached 13.68% and maintained endogenous growth, opening up space for subsequent high-quality development. On the debt side, the growth rates of retail term and current accounts reached 53.48% and 27.31% respectively, which led to a year-on-year increase of 18.73% in total deposits, and the growth rate reached a new high of nearly 8 years.

Net interest spreads stabilized month-on-month, and wealth management transformation progressed. The Group's net interest spread for the whole year was 2.40%, a slight decrease of 1 bps from the previous three quarters, and continued to maintain the leading level of listed banks. Among them, the return on interest-bearing assets and the cost ratio of interest-bearing debt fell slightly by 1 bps and rose slightly by 1 bps, respectively, from the previous three quarters. The impact of loan repricing and deposit regularization in 2023 may still exist, but as the economy recovers and consumption picks up, retail loan investment and demand for settlement capital are expected to increase, and optimization of the capital burden structure is expected to ease the pressure on interest spreads. Despite being impacted by short-term market fluctuations, the company is determined to improve its large wealth management capabilities and accelerate the transformation of its business model. At the end of the year, the number of retail customers, retail AUM, wealth product holdings, and private AUM increased 6.36%, 12.68%, 14.14%, and 11.74%, respectively.

The quality of assets is stable, and there are plenty of safety pads. Affected by the economic slowdown and risk release from real estate customers, the non-performing rate rose 1 bps to 0.96% month-on-month at the end of 2022. Concerned that the loan ratio increased 7 bps to 1.21% month-on-month, the asset quality was still at the best level of listed stock banks. Among them, the balance of domestic and external housing business fell 17.31% year on year, and risk exposure narrowed further. The provision coverage rate fell 4.88pct month-on-month to 450.79%, and risk resilience was strong.

Profit forecasting and investment ratings: The company focuses on the three core capacity building capabilities of “wealth management, fintech, and risk management” to actively promote high-quality development while further consolidating the dominant position of retail finance. In the future, as consumption picks up, risk management in the real estate industry progresses, and the big wealth management flywheel accelerates, the company's development prospects are promising.

We expect the year-on-year growth rates of the company's net profit to the mother in 2023-2025 to be 14.09%, 13.38%, and 12.92%, respectively.

Risk factors: economic downturn exceeding expectations, policy introduction falling short of expectations, significant deterioration in asset quality, etc.

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