Huachuang Securities·2025-04-30 10:06Investment Rating - The report maintains a "Recommended" rating for China Merchants Bank (招商银行) with a target price of 52.9 CNY [2][9]. Core Views - The bank's customer base is solid, and the decline in net interest margin has narrowed quarter-on-quarter. The first quarter of 2025 saw a revenue of 83.751 billion CNY, a year-on-year decrease of 3.09%, and a net profit attributable to shareholders of 37.286 billion CNY, down 2.08% year-on-year [2][9]. - The bank's non-performing loan ratio stands at 0.94%, with a provision coverage ratio of 410.03% [2][9]. - The report highlights a significant improvement in net interest income, which turned positive after five consecutive quarters of decline, driven by asset growth [8][9]. Financial Performance Summary - Revenue and Profit: In Q1 2025, the bank's revenue was 83.751 billion CNY, down 3.09% year-on-year, while net profit was 37.286 billion CNY, down 2.08% year-on-year [2][9]. - Net Interest Income: The net interest income increased by 1.92% year-on-year, supported by a growth in average daily interest-earning assets by 8.7% year-on-year [8][9]. - Non-Interest Income: Non-interest income decreased by 10.64% year-on-year, with wealth management fees showing a positive growth of 10.45% [8][9]. Asset and Liability Management - Asset Growth: Total assets grew by 3.11% to 12.53 trillion CNY, with loans and advances increasing by 3.44% to 7.13 trillion CNY [8][9]. - Liability Management: Total liabilities increased by 3.27%, with customer deposits growing by 2.45% to 9.32 trillion CNY [8][9]. - Deposit Structure: The proportion of demand deposits is 51.80%, slightly down from the end of the previous year, indicating a trend towards term deposits [8][9]. Risk and Quality Indicators - Asset Quality: The non-performing loan ratio is stable at 0.94%, with a slight increase in non-performing loans by 11.33 billion CNY year-to-date [8][9]. - Forward-Looking Indicators: The report notes an increase in the attention loan ratio to 1.36% and overdue loan ratio to 1.38% [8][9]. Long-term Outlook - The report anticipates that despite some challenges in non-interest income, revenue growth will remain resilient, with a long-term positive outlook for the bank's fundamentals and strategic execution [9]. - The projected net profit growth rates for 2025, 2026, and 2027 are adjusted to 0.7%, 3.7%, and 4.9% respectively [9].