Huachuang Securities·2024-04-30 11:02Investment Rating - The report maintains a "Recommended" rating for China Merchants Bank (600036) with a target price of 38.44 CNY, compared to the current price of 34.88 CNY [12]. Core Views - The first quarter revenue growth is expected to stabilize, with marginal improvements in asset quality. The bank reported Q1 2024 operating revenue of 86.417 billion CNY, a year-on-year decrease of 4.65%, and a net profit attributable to shareholders of 38.077 billion CNY, down 1.96% year-on-year [12][14]. - The net interest margin for the year is 2.02%, with a non-performing loan (NPL) ratio of 0.92% and a provision coverage ratio of 436.82% [12]. Summary by Sections Financial Performance - Q1 net interest income decreased by 6.2% year-on-year, leading to a total revenue decline of 4.7%. The net interest income for Q1 was 52.0 billion CNY, with a daily average net interest margin of 2.02%, down 2 basis points from Q4 2023 and 27 basis points year-on-year [12]. - Non-interest income saw a significant drop, with net fee income at 20.204 billion CNY, down 19.44% year-on-year, primarily due to a decline in wealth management fees [12]. Asset Quality - The asset quality shows marginal improvement, with a decrease in the NPL generation rate both quarter-on-quarter and year-on-year. The NPL ratio stands at 0.92%, down 3 basis points, while the provision coverage ratio remains robust at 436.8% [12][14]. - The report indicates that the real estate sector's NPL ratio has decreased, reflecting improved conditions in this area [12]. Future Outlook - The report anticipates that the overall performance growth will remain stable despite challenges from loan repricing and a potential further reduction in the 5-year LPR. Long-term, the bank's fundamentals are solid, with a clear strategic execution and a strong retail customer base [12][14]. - The projected net profit growth rates for 2024, 2025, and 2026 are adjusted to 1.1%, 3.6%, and 5.3%, respectively, reflecting a cautious outlook amid current market conditions [12].