Core Viewpoint - The company experienced significant operational pressure in Q1 due to loan repricing starting January 1, which further compressed interest margins, but showed improvement in Q2, with expectations for steady progress in the latter half of the year [2] Financial Performance - For the first half of 2025, the company reported operating income of 1699.7 billion yuan, a slight decrease of 1.72% year-on-year, and a net profit attributable to shareholders of 749.3 billion yuan, a marginal increase of 0.25% [2][4] - The company plans to initiate a mid-term cash dividend, with the distribution amounting to 35% of the net profit attributable to ordinary shareholders for the half-year, which is higher than peers [2][10] Asset and Loan Growth - As of June 30, total assets grew by 4.16% year-on-year to 12.66 trillion yuan, with loan and deposit balances increasing by 3.31% and 3.58% respectively [3] - Retail loans accounted for over 50% of the company's loan portfolio, with a retail loan balance of 36,781.88 billion yuan, reflecting a growth of 0.92% [7] Interest Margin and Cost Structure - The company's net interest margin and net interest yield were reported at 1.79% and 1.88%, respectively, both showing declines compared to the previous year [4] - Interest income decreased by 5.84% year-on-year, with loan interest income down by 9.93% [4] Asset Quality - As of June 30, the non-performing loan balance was 663.70 billion yuan, with a non-performing loan ratio of 0.93%, slightly down from the previous year [6] - The company maintains a high provision coverage ratio of 410.93%, indicating strong risk resilience [6] Retail Credit Risk - Retail credit risk has increased but remains manageable, with a retail non-performing loan ratio of 1.03%, up 0.07 percentage points from the previous year [7][8] - The company attributes the increase in retail credit risk to a broader industry trend, with expectations for a slight rise in risk levels in the near term [8] Strategic Focus - The company aims to enhance high-quality, low-cost liability growth and improve asset organization to stabilize interest margins [5] - The "anti-involution" trend in the banking sector is seen as beneficial for stabilizing loan pricing and controlling deposit costs, which could enhance asset quality [10]

Market Overview - The A-share market saw a significant pullback in CPO and AI computing power concept stocks, with the CPO index dropping by 7.73% and several stocks hitting the daily limit down, including Guangxun Technology and Jingwang Electronics [1][2] - The banking sector showed resilience, with the banking index rising by 1.23%, driven by gains in major banks such as Chongqing Rural Commercial Bank and China Merchants Bank [3][4] Banking Sector Performance - As of September 1, 2023, 17 out of 42 listed banks announced plans for mid-term dividends for 2025, with state-owned banks leading in generosity, collectively proposing cash dividends totaling 204.657 billion [6][7] - Industrial and Commercial Bank of China (ICBC) proposed the largest dividend of 50.396 billion, followed by China Construction Bank and Agricultural Bank of China with 48.61 billion and 41.82 billion respectively [7] - Several joint-stock banks, including China Merchants Bank and CITIC Bank, also confirmed mid-term dividends, with CITIC Bank's cash dividend exceeding 10.46 billion [8] Investment Outlook - Despite recent adjustments in the banking sector, the China Securities Banking Index has increased by 9.05%, with three banks, Agricultural Bank of China, Shanghai Pudong Development Bank, and Qingdao Bank, seeing stock price increases exceeding 30% year-to-date [10] - Analysts suggest that the banking sector offers stability and attractive dividend yields, making it a favorable investment during market fluctuations [10][11] - The trend of increasing dividends and the potential for long-term investment value in the banking sector is supported by ongoing low interest rates and a focus on enhancing shareholder returns [11][12]

Core Viewpoint - The report indicates that China Merchants Bank has shown improvement in profit growth and asset quality, leading to a recommendation for an "overweight" rating [1][6]. Financial Performance - In the first half of 2025, China Merchants Bank reported operating revenue of approximately 169.97 billion yuan, a year-on-year decrease of 1.72%, with the decline narrowing by 1.36 percentage points compared to the first quarter [3]. - The net profit attributable to shareholders increased by 0.25% year-on-year, marking a turnaround from previous declines [2][3]. - The bank's non-performing loan ratio stood at 0.93%, a decrease of 1 basis point from the previous quarter and 2 basis points from the end of 2024 [5]. Revenue Composition - Net interest income was 106.09 billion yuan, representing a year-on-year increase of 1.57%, accounting for 62.41% of total revenue [3]. - Non-interest income was 63.88 billion yuan, down 6.73% year-on-year, making up 37.59% of total revenue [3]. Asset Quality - The bank's provision coverage ratio was 410.93%, indicating a strong buffer against potential loan losses [5]. - The bank's asset and liability growth rates improved compared to the end of the first quarter, with total assets growing by 9.35% year-on-year [4][5]. Investment Outlook - The bank is expected to see net profit growth of 0.80%, 3.93%, and 4.42% for the years 2025 to 2027, respectively [6]. - The bank's first implementation of a mid-term dividend in 2025 is noted as a positive development [6].

Core Viewpoint - The banking sector is showing signs of recovery with improved financial metrics and a favorable investment environment, particularly for bank ETFs that track the performance of listed banks in China [4][5][6]. Group 1: Bank ETFs Performance - The Bank ETFs are designed to passively track the CSI Bank Index, which includes 42 listed banks in A-shares, with nearly 30% of the portfolio allocated to major state-owned banks like ICBC, ABC, and CCB, capturing high dividend opportunities [4]. - Approximately 70% of the portfolio focuses on high-growth joint-stock banks and city commercial banks, making it an efficient investment tool for tracking the overall banking sector [4]. - The Bank AH Preferred ETF tracks the Bank AH Index, which consists of securities listed in both A-shares and Hong Kong, employing a monthly security category conversion strategy [4]. Group 2: Financial Performance of Banks - In the first half of the year, 42 A-share listed banks achieved total operating income exceeding 2.9 trillion yuan, a year-on-year increase of over 1%, and a net profit attributable to shareholders of 1.1 trillion yuan, up 0.8% year-on-year [4]. - Major state-owned banks reported net profits exceeding 100 billion yuan each in the first half of the year, with non-performing loan ratios remaining low across the six major commercial banks [4]. Group 3: Sector Analysis and Outlook - The performance of state-owned banks has improved beyond expectations, with significant recovery in fee and other non-interest income growth compared to Q1, driving overall performance [5]. - Joint-stock banks are experiencing a rebound in revenue and profit growth due to stable asset quality and improved non-interest income [5]. - The banking sector is expected to see a rotation and rebound, with the overall performance of banks in the mid-year report indicating a recovery in ROE [5]. - The ranking of bank sub-sectors is as follows: joint-stock banks > city commercial banks = state-owned banks > rural commercial banks, with a strong outlook for joint-stock banks due to financial clearing and valuation recovery [5]. Group 4: Long-term Valuation Recovery - The long-term logic for systemic valuation recovery of bank stocks remains unchanged, with marginal improvements in the banking sector helping to boost market confidence [6]. - The easing of loan rate declines and continuous improvement in deposit costs are expected to support the stabilization of the banking sector's fundamentals [6]. - The attractiveness of bank stocks to medium- and long-term funds remains strong, with low interest rates and an "asset shortage" environment enhancing dividend yield and valuation advantages [6].

Core Viewpoint - The current capital market is experiencing a phenomenon of deposit outflow, leading to increased pressure on demand deposits growth for China Merchants Bank (CMB) [1] Financial Performance - In the first half of 2025, CMB reported operating income of 169.97 billion yuan, a year-on-year decrease of 1.72%, while net profit attributable to shareholders was 74.93 billion yuan, a slight increase of 0.25% [1] - CMB's daily earnings for the first half of 2025 averaged approximately 409 million yuan [1] - The bank's net interest income for the first half of 2025 was 106.09 billion yuan, up 1.57% year-on-year, with a net interest margin of 1.88%, down 12 basis points year-on-year [4] Deposit and Loan Trends - As of June 30, 2025, CMB's average daily balance of demand deposits was 4.38 trillion yuan, a year-on-year increase of 4.78%, accounting for 50.26% of total customer deposits [5] - The average cost of customer deposits was 1.26%, down 28 basis points from the end of the previous year [4] - Retail loans amounted to 3.61 trillion yuan, a slight increase of 0.94%, representing 53.43% of total loans, down 1.21 percentage points from the end of the previous year [7] Non-Interest Income - CMB's non-interest income for the first half of 2025 was 63.88 billion yuan, a decrease of 6.73% year-on-year, with net fee and commission income at 37.60 billion yuan, down 1.89% [6] - Wealth management fee and commission income saw a notable increase of 11.89% year-on-year, marking the first positive growth in three years [6] Retail Banking Strategy - CMB's retail banking business contributes over 55% to both revenue and profit, with a total retail customer base of 216 million, up 2.86% from the end of the previous year [7] - The bank's management emphasized a commitment to maintaining a strong retail strategy while being cautious in tactical execution amid rising risks in the retail credit sector [8][9]

Market Overview - The A-share market experienced a collective pullback on September 2, with the Shanghai Composite Index falling to 3844.84 points, down 0.79%, the Shenzhen Component Index down 2.21%, and the ChiNext Index down 2.90% [1][2]. Sector Performance - The brokerage sector saw a sudden surge in the morning, with notable gains including Pacific Securities hitting the daily limit, Guosheng Financial increasing by 5.82%, and Changcheng Securities rising over 4% [3][4]. - Financial stocks generally performed well, with major banks like China Merchants Bank rising nearly 3%, and other banks such as China Construction Bank, CITIC Bank, and Industrial and Commercial Bank of China increasing by over 1% [3][4]. Consumer Sector - Several consumer stocks rose against the market trend, with BeiGene up 9.84% and Midea Group also showing gains. Kweichow Moutai's stock price briefly returned to 1500 yuan, currently reported at 1488.07 yuan per share [4][6]. Gold and Silver Market - The gold and jewelry sector saw significant gains, with stocks like Mankalon rising by 16% and several others hitting the daily limit. Gold futures and spot prices both surpassed the $3500 mark, influenced by expectations of U.S. interest rate cuts and a weak dollar, with gold prices up over 33% year-to-date [10][12]. Declining Sectors - The photovoltaic sector faced significant declines, with CPO modules, optical communication, and digital currency-related stocks among the hardest hit, showing drops of over 5% [8][9].

Market Overview - The market exhibited a "seesaw" effect with high dividend assets performing actively while technology stocks experienced a pullback [1] - The banking and electricity sectors saw gains, while the computing industry chain stocks, including Dekoli, Cambridge Technology, and others, faced significant declines [1] - The Shanghai Composite Index fell by 0.79%, the Shenzhen Component Index dropped by 2.21%, and the ChiNext Index decreased by 2.9% [2] Banking Sector - The banking sector rebounded with notable gains in stocks such as Chongqing Rural Commercial Bank and Shanghai Rural Commercial Bank [3] - The overall performance of the banking sector's mid-year reports showed improvement, with most banks experiencing revenue and profit growth, a stable non-performing loan ratio, and a steady provision coverage ratio [5] - Analysts suggest that the banking sector may see a rotation and rebound due to solid fundamentals and previous adjustments, with a focus on regional banks and high-dividend stocks [6] Electricity Sector - The electricity sector showed strong performance, with stocks like Jingyuntong and Huaguang New Energy experiencing significant increases [8] - In July, the total electricity consumption reached 10,226 billion kWh, marking an 8.6% year-on-year increase, indicating robust demand [9] - Analysts recommend focusing on leading companies in renewable energy, regional offshore wind power firms, and water power stocks with stable performance and growth potential [9]

Core Viewpoint - The management of China Merchants Bank (CMB) expressed confidence in achieving steady progress and completing the annual budget goals despite recent challenges in the banking sector [2][4]. Group 1: Annual Performance Outlook - CMB's net profit growth turned positive in the first half of the year, with the second quarter performing better than the first, which faced significant pressure due to loan repricing [3][4]. - The bank aims to implement strategic development, enhance cost management, promote non-interest income, and strengthen asset quality to maintain a positive growth trajectory [4]. Group 2: Retail Business Strengths - CMB's retail business is supported by three key factors: technological capabilities, a dedicated workforce, and a customer-centric value system [5][6][7]. - Retail assets under management (AUM) reached 16.03 trillion yuan, with the highest growth in recent years, and retail wealth management income increased by 6% year-on-year [5]. Group 3: Balancing Short-term and Long-term Goals - The bank emphasizes the importance of balancing short-term performance with long-term sustainability, likening banking operations to a marathon rather than a sprint [8]. - CMB aims to solidify its foundational aspects, including customer base and management, while focusing on long-term strategic goals [8]. Group 4: Changes in Customer Risk Preferences - There has been a shift in retail customers' risk preferences, with a gradual improvement in their inclination towards equity assets, although a conservative approach remains predominant [9]. - CMB is committed to providing a stable and comprehensive wealth management experience to meet evolving customer needs [9]. Group 5: Return on Equity (ROE) Management - CMB has established a financial management system focused on ROE, which currently stands at 13.85%, significantly higher than the industry average of around 9% [10][11]. - The bank aims to balance profit growth, net asset accumulation, and dividends to maintain a competitive ROE and meet investor expectations [11][12]. Group 6: Internationalization Strategy - CMB is accelerating its internationalization efforts, recognizing it as a new growth point amid increasing global integration and domestic market saturation [13]. - The bank has already established a network of overseas branches and is enhancing the capabilities of its international operations [13].

Market Overview - The Shanghai Composite Index closed at 3844.84 points, above the six-month moving average, with a decline of 0.79% [1] - The total trading volume of A-shares reached 19,304.44 billion yuan [1] Stocks Performance - A total of 35 A-shares have surpassed the six-month moving average, with notable stocks including: - Gongsiao Daji (供销大集) with a deviation rate of 6.45% - Jidian Co. (吉电股份) with a deviation rate of 6.05% - *ST Sansheng (ST三圣) with a deviation rate of 4.29% [1] - Stocks with smaller deviation rates that just crossed the six-month line include: - Fuling Co. (富岭股份) - Hubei Energy (湖北能源) - Yunnan Tourism (云南旅游) [1] Top Stocks by Deviation Rate - The following stocks had the highest deviation rates on September 2: - Gongsiao Daji (供销大集): 9.84% increase, 4.84% turnover rate, latest price 2.68 yuan - Jidian Co. (吉电股份): 7.34% increase, 6.58% turnover rate, latest price 5.56 yuan - *ST Sansheng (ST三圣): 5.10% increase, 2.62% turnover rate, latest price 4.74 yuan [1] Additional Stocks with Notable Performance - Other stocks with significant performance include: - Huayuan Co. (华原股份): 3.93% increase, 2.74% turnover rate, latest price 17.71 yuan - Meiyan Jixiang (梅雁吉祥): 4.59% increase, 7.21% turnover rate, latest price 2.96 yuan - Qingdao Port (青岛港): 2.31% increase, 0.57% turnover rate, latest price 8.87 yuan [1]

Group 1: Annual Performance Outlook - The company believes it can achieve steady progress and meet the budget goals set at the beginning of the year, with a positive outlook for the second half of the year [6][4] - The first quarter faced significant pressure due to loan repricing starting January 1, leading to a decline in net interest margin, but the second quarter showed improvement [6][4] - The company plans to focus on strategic development, cost management, non-interest income growth, and asset quality control to maintain a positive trajectory [6][4] Group 2: Retail Business Strengths - The retail business is supported by three key factors: technological capabilities, a dedicated workforce, and a customer-centric value system [5][7] - Retail assets under management (AUM) reached 16.03 trillion yuan, with the highest growth in recent years, and retail wealth management income increased by 6% year-on-year [7][5] Group 3: Balancing Short-term and Long-term Goals - The company emphasizes that banking is a marathon, not a sprint, and must focus on long-term sustainability rather than short-term gains [11][12] - It aims to strengthen foundational aspects such as customer base, workforce, management, and business to ensure long-term success [11][12] Group 4: Changes in Customer Risk Preferences - There has been a shift in retail customers' risk preferences, with a gradual improvement in their willingness to engage in riskier investments [12][5] - The company aims to adapt to market trends and customer needs to provide a comprehensive wealth management experience [12][5] Group 5: Return on Equity (ROE) Management - The company's ROE is currently at 13.85%, significantly higher than the industry average of around 9%, and it aims to maintain this leading position [13][14] - Future ROE levels will depend on the recovery of profitability, net asset growth, and dividend policies [14][13] Group 6: Internationalization Strategy - The company is accelerating its internationalization efforts, recognizing it as a new growth point amid increasing global integration [15][16] - It has established a network of overseas branches and is enhancing the capabilities of its international operations [16][15]