Summary of China Merchants Bank Conference Call Company Overview - **Company**: China Merchants Bank (招商银行) - **Date**: May 22, 2025 Key Points Financial Performance - **Net Interest Income**: Increased by nearly 2% year-on-year in Q1 2025, attributed to a narrowing of interest rate cuts, despite a decline in net interest margin by 11 basis points year-on-year [2][7][8] - **Loan Pricing**: Overall slight decrease in loan pricing; corporate loans saw a significant decline while retail loans remained stable or slightly decreased due to regulatory guidance [2][3][6] - **Deposit Growth**: Weak loan demand has led to sluggish deposit growth, with M1 and M2 widening [2][10] - **Wealth Management Fees**: Grew by 10.5% year-on-year in Q1 2025, marking the first significant positive growth since 2022, driven by nearly 30% growth in fund sales, wealth management, and trust services [2][13] - **Card Fees**: Card transaction fees and settlement fees declined by 7-8% year-on-year due to weak consumption [2][14] Loan Demand and Credit Quality - **Credit Demand**: Remains weak in Q2 2025; retail loans showed marginal recovery in early May but overall demand is still not significantly improved [3][4] - **Asset Quality**: Retail loan non-performing loans (NPLs) are rising, but the bank maintains a solid provision coverage ratio [3][17][18] - **Corporate Loan Risks**: Concentrated in real estate and related sectors, with overall asset quality in other sectors remaining low [3][19][20] Market Conditions and Economic Outlook - **Trade War Impact**: Limited short-term impact from the US-China trade war observed; however, long-term effects depend on future tariff policies [4][5] - **Interest Rate Trends**: New loan pricing has slightly decreased; retail loan pricing remains stable or slightly down due to regulatory constraints [6][8] - **Deposit Rate Adjustments**: Recent adjustments in deposit rates have raised concerns about potential deposit outflows, but the bank views the changes as beneficial due to its high proportion of demand deposits [9][11] Future Strategies - **Loan Strategy**: The bank will not rigidly increase any specific type of loan but will adjust based on market demand [4][21] - **Wealth Management Focus**: Continued emphasis on wealth management services to enhance fee income, with expectations for further growth in Q2 2025 [13][14] - **Dividends**: Plans for mid-term dividends in 2025 have been announced, with distributions expected in early and mid-2026 [23] Risks and Challenges - **Economic Uncertainty**: The bank faces significant operational pressure due to geopolitical factors and weak loan demand, with Q1 2025 expected to be the most challenging period of the year [15][16][22] - **Retail Loan Quality**: While retail loan quality is under scrutiny, the bank has sufficient provisions to manage potential risks [18][22] Conclusion - China Merchants Bank is navigating a challenging economic landscape with a focus on maintaining asset quality, adjusting loan strategies based on market conditions, and enhancing wealth management services to drive fee income growth. The outlook remains cautious due to external economic pressures and internal loan demand weaknesses.

Core Viewpoint - The trend of deposit regularization continues among A-share listed banks, with 90% of banks reporting an increase in total deposits year-on-year, particularly in personal fixed deposits, while interest income is declining and liability costs are rising [1][2][11]. Deposit Trends - Among the 25 listed banks, total deposits reached 185.58 trillion yuan, a 5% increase year-on-year, with only Minsheng Bank and Everbright Bank showing a decline [2][3]. - Personal fixed deposits increased significantly, with Zhengzhou Bank reporting a nearly 40% year-on-year growth [4][5]. - The trend of deposit regularization is evident, with a notable increase in the proportion of fixed deposits compared to demand deposits [6][12]. Interest Expense and Rate Adjustments - Many banks are experiencing rising interest expenses on deposits, with notable increases reported by Changshu Bank and Ningbo Bank [7][8]. - In response to the pressure on liability management, several banks, especially small and medium-sized ones, have lowered deposit and large certificate of deposit rates, with some reductions reaching 40 basis points [9][10]. Net Interest Margin and Management Strategies - The net interest margin for commercial banks has decreased to 1.52%, with 16 out of 25 listed banks reporting a decline in interest income [11][12]. - Banks are focusing on controlling high-cost deposit scales and optimizing asset-liability structures to stabilize net interest margins [12].

昨晚招行公布了24年的年报， 今天，A股招行大跌近-5.4%，港股招行大跌近-5.5% ，由于招行在中证银行指数中占比达到16%，因此光招行一 家的下跌，就导致指数下跌-0.86%左右，而指数本身仅下跌-1.44%，也就是说，招行一己之力今天带动了银行股垫底的行情。 从交易量来看，银行股今天合计230亿多的交易量，招行一家占比30%左右，市场对招行年报的关注度，不可谓不高。 和去年一样，提前补充一下，招行作为全中国最好的商业银行之一，更多的还是以点带面，说说银行业的实际情况，以及春江水暖鸭先知，通过 银行业，了解下宏观和微观经济的实际情况。 去年此时，我们就招行23年的年报，写过《 招行年报里的十大真相 》，大家比较爱看，因为分析的角度还算全面，跳出银行看银行，讲了比较 多宏观的因素。 ...... 今天，我们继续。 从财报发布开始，市场里的解读已经不少了，赞歌不少，但干货不多。 不可忽视的是，从招行的年报中，我们可以看到， 银行业，正面临着近20年罕见的经营环境 ——2024年，招行的ROE（净资产收益率）下滑到 15%以下，是2004年以来首次。 我们知道，银行归根到底是经营杠杆的行业，1块钱的资本金，能 ...

Investment Rating - The report indicates a positive outlook for M1 growth, suggesting a potential upward trend in the coming quarters [11][35]. Core Insights - M1 growth showed a rebound trend in Q4 2024, but experienced a decline again in early 2025 due to the Spring Festival effect. The report explores the factors driving M1 growth changes and whether a new upward trend has begun [11][35]. - The report identifies five key factors influencing M1 growth: fiscal policy, monetary policy, entity activity, financial system, and external factors. It highlights that fiscal policy has become the primary driver of M1 growth, especially in 2024 [20][35]. - The report emphasizes that the contribution of entity demand to M1 growth has weakened significantly since 2018, while fiscal policy's contribution has increased, reaching 7.3 percentage points in 2024 [35][41]. Summary by Sections 1. Changes in M1 - M1 growth rebounded starting October 2024, reaching 1.2% in December, but slowed to 0.4% in January 2025. The government bond issuance accelerated from August 2024, contributing to M1's recovery [11][12][35]. - The new M1 calculation includes personal demand deposits, which smooths out the impact of seasonal factors like the Spring Festival [11][13][35]. 2. Factors Driving M1 Growth: Insights from the Five-Factor Model - The report notes that the average annual contribution of entity demand to M1 growth has dropped to 2.2 percentage points in 2024, compared to an average of 10 percentage points from 2018 to 2021 [20][35]. - The financial system's contribution to M1 growth has been negative in recent years, reflecting the drag from interbank fund circulation [35][41]. 3. Is M1 Entering an Upward Cycle? - Historical data shows that M1 growth has typically rebounded significantly during previous cycles, with increases of over 10 percentage points lasting more than a year [41][45]. - The report suggests that while fiscal policy may drive M1 growth, the current recovery in entity demand remains weak, and the central bank's monetary policy focus is on stabilizing bank interest margins rather than large-scale liquidity injections [45][49].