According to a report published by Citibank, China Merchants Bank was dragged down by net interest spreads and weak handling fee revenue. Earnings before provision for the first quarter fell 6.1% year-on-year, offsetting the positive impact of steady transaction earnings. During the period, net profit after tax grew less than expected, falling 2% year-on-year to 38.1 billion yuan. Return on assets (ROA) and return on shareholders (ROE) decreased by 15 and 235 basis points, respectively, from year to year to 1.35% and 16.08%, respectively.

Citi expects that in the first quarter of this year, its recruitment performance was weaker than expected, and revenue and profit growth were lower than those of its peers, and its stock price would react negatively. CMB H shares have increased by about 25.7% this year. Citi believes that it is currently difficult to prove that CMB's valuation premium is reasonable, or narrow compared to the valuation premium of large banks. The report said that although there is still confidence in CMB's ability to achieve positive profit growth this year, investors may be disappointed with weaker than expected results in the short term.

The bank gave CMB H shares a “buy” rating, with a target price of HK$35.52.