Zhi Tong Cai Jing·2026-01-26 07:37Core Viewpoint - JPMorgan's report indicates that China Merchants Bank (03968) achieved a 3% year-on-year increase in net profit for Q4, surpassing Morgan Stanley's forecast by 2 percentage points and exceeding market expectations by 7 percentage points [1] Financial Performance - Operating income rose by 2% year-on-year [1] - The non-performing loan coverage ratio decreased by 14 percentage points quarter-on-quarter to 392% [1] - The non-performing loan ratio remained stable at 0.94% [1] Market Reaction and Ratings - The bank anticipates a positive market reaction to the higher profit growth in Q4, reaffirming an "Overweight" rating with a target price of HKD 61 [1] - China Merchants Bank is listed as one of the preferred stocks in the industry [1] Asset Quality and Provisions - Morgan Stanley notes that the bank increased bad debt recognition and write-offs in the last quarter, which helped maintain stable non-performing loans, although the provision amount decreased [1] - The decline in provisions is not expected to raise substantial concerns regarding the bank's future profitability, as it holds the highest bad debt coverage ratio among Chinese commercial and state-owned banks [1] - Investors anticipate a recovery in earnings and stable asset quality by 2026 [1]