Core Viewpoint - The retail credit market is experiencing a significant divergence between traditional credit card business contraction and the expansion of personal loans, driven by consumption and growth stabilization policies [2][9]. Credit Card Business Contraction - The total number of credit cards and combined credit cards has declined for 11 consecutive quarters, with a reduction of 12 million cards compared to the end of last year [2]. - Among 15 listed banks, 11 reported a decrease in credit card loan balances compared to the end of last year, highlighting a prominent industry-wide contraction [3]. - The most significant decline in credit card loan balances was observed at Bank of China, with a decrease of 13.89%, followed by Postal Savings Bank at 5.67% [3]. - Credit card transaction volumes and consumer spending are also under pressure, with a notable decline in transaction income for major banks like China Merchants Bank, which saw an 8.54% year-on-year decrease in transaction volume [4][5]. Shift to Personal Loans - In response to the challenges faced by credit card businesses, banks are increasingly focusing on personal loans, particularly in the consumer loan sector, with many banks offering high limits and low-interest rates [2][9]. - Data from six state-owned banks and ten listed joint-stock banks indicate that personal loans and consumer loans have shown significant growth, with several state-owned banks reporting increases exceeding 10% [9][10]. - Agricultural Bank of China led the growth in personal loans with a 5.60% increase, while other state-owned banks also reported positive growth rates [9]. Asset Quality Concerns - The overall asset quality of retail credit is under pressure, with rising non-performing loan (NPL) ratios for personal loans and credit cards among state-owned banks [11][12]. - The NPL ratio for personal loans at major banks like Postal Savings Bank and China Merchants Bank has increased, with the highest NPL ratio for personal consumption loans at Industrial and Commercial Bank of China at 2.51% [12]. - In contrast, some joint-stock banks have shown improvements in credit card NPL ratios, with a notable decrease at banks like Industrial Bank and Ping An Bank [13][14].

Core Viewpoint - The retail credit market is experiencing a significant divergence between traditional credit card business contraction and the expansion of personal loans, driven by consumer demand and policy support [2][11]. Credit Card Business - The total number of credit cards and credit card loans has declined for 11 consecutive quarters, with a reduction of 12 million cards compared to the end of last year [2]. - Among 15 listed banks, 11 reported a decrease in credit card loan balances compared to the end of last year, highlighting a pronounced industry-wide contraction [3]. - The most significant decline in credit card loan balances was observed at Bank of China, with a drop of 13.89%, followed by Postal Savings Bank at 5.67% [4]. - Credit card transaction volumes have also decreased, leading to a decline in non-interest income, with some banks reporting drops exceeding 15% [2][6]. Personal Loans - In contrast to the credit card sector, personal loans, particularly consumer loans, have seen robust growth, with several banks reporting increases exceeding 10% [11]. - Among state-owned banks, personal loans and consumer loans have both shown positive growth, with Agricultural Bank leading at 5.60% [12]. - The consumer loan segment has become a key growth driver for banks, with many institutions launching tailored products to stimulate demand [2][11]. Asset Quality - The asset quality of retail credit is under pressure, with rising non-performing loan (NPL) ratios for personal loans and credit cards across many banks [16]. - State-owned banks generally exhibit higher NPL ratios, with notable increases in personal loan NPLs for several institutions [17]. - Credit card NPL ratios have also risen, particularly at Industrial and Commercial Bank of China, which reported a rate of 3.75% [18][20]. Market Dynamics - The decline in credit card usage reflects a broader shift in consumer spending patterns, with an increase in smaller, more frequent transactions [6][8]. - The overall market for credit cards is facing significant challenges, with many banks reporting double-digit declines in credit card income [9][10].

Core Viewpoint - The core viewpoint of the article emphasizes that despite facing challenges in retail lending and a slight increase in risk, China Merchants Bank (招商银行) maintains a stable overall asset quality and is committed to its strategic direction in retail banking and international expansion [1][6][9]. Financial Performance - In the first half of 2025, China Merchants Bank reported operating income of 169.92 billion yuan, a year-on-year decrease of 1.72%, and a net profit of 74.93 billion yuan, a year-on-year increase of 0.25% [2]. - The bank's non-performing loan (NPL) ratio stood at 0.93%, a decrease of 0.02 percentage points from the end of the previous year [2]. Retail Banking Insights - Retail banking contributed 58.53% to pre-tax profit, up from 57.1% in the same period last year, with retail assets under management (AUM) reaching 16 trillion yuan [7]. - The NPL ratio in retail banking increased by 0.07 percentage points to 1.03%, reflecting broader industry challenges [7]. - The bank's retail strategy focuses on three pillars: technological capabilities, team development, and core values [7][8]. Internationalization Strategy - The bank's management highlighted the necessity of internationalization as a response to market trends and pressures, aiming to enhance its global presence and service capabilities [10][11]. - The internationalization strategy is seen as essential for overcoming domestic market limitations and adapting to the evolving financial landscape [11][12]. Net Interest Margin Trends - As of June 2025, the net interest margin (NIM) was reported at 1.88%, a year-on-year decrease of 12 basis points [14]. - The bank's NIM remains above the industry average of 1.42%, indicating a competitive position despite the downward pressure on margins [16]. - Factors influencing NIM include the downward trend in loan pricing and the bank's strategy to manage deposit costs effectively [16][17]. Corporate Banking Focus - The corporate banking division is focusing on four key areas: technology enterprises, industry consolidation, supply chain financing, and inclusive finance [19][21]. - The bank aims to leverage its strengths in digital technology to enhance service offerings and maintain a low NPL ratio in corporate lending [19].

Core Viewpoint - The implementation of personal consumption loan interest subsidy policies and service industry operating entity loan interest subsidy policies aims to lower financing costs, stimulate consumption potential, and boost market vitality [1][4]. Group 1: Policy Implementation - The Ministry of Finance and nine other departments issued the implementation plan for the service industry operating entity loan interest subsidy policy, which applies to loans issued by 21 national banks to eight categories of service industries from March 16, 2025, to December 31, 2025 [2]. - The subsidy period is capped at one year, with an annual subsidy rate of 1% of the loan principal, and a maximum subsidy of 10,000 yuan per entity [2]. - The central and provincial finances will bear 90% and 10% of the subsidy funds, respectively [2]. Group 2: Personal Consumption Loan Subsidy - The Ministry of Finance, the central bank, and the banking regulatory authority issued the implementation plan for the personal consumption loan interest subsidy policy, which applies to loans identifiable for consumption from September 1, 2025, to August 31, 2026 [3]. - The annual subsidy rate is set at 1 percentage point, not exceeding 50% of the loan contract interest rate, with a maximum cumulative subsidy of 3,000 yuan for individuals [3]. - The subsidy funds will also be shared by the central and provincial finances at a ratio of 90% to 10% [3]. Group 3: Investment Recommendations - The two subsidy policies work in tandem with other measures in the "Consumption Promotion Special Action Plan," aiming to stimulate consumption potential and enhance market activity from both demand and supply sides [4]. - The fiscal subsidies will lower financing costs for entities, benefiting retail and small micro-loan demand while alleviating credit risks to some extent [4]. - State-owned and joint-stock banks are expected to directly benefit from these policies, while local rural commercial banks may also develop their own consumption loan subsidy policies [4].

对在2025/9/1-2026/8/31期间，由国有行、股份行及5 家消金公司发放的、可识别用于消费的个人消费贷 (不含信用卡)进行贴息。年贴息率为1pct，且最高不超过贷款合同利率的50%。单人在单家机构可享受 的累计贴息上限为3000 元(对应累计消费金额30万元)，其中单笔5 万元以下消费贷累计贴息上限为1000 元(对应累计消费金额10 万元)，单笔5 万元及以上消费贷需用于指定的重点领域，并以5万元为上限进 行贴息。部分大额消费贷期限或超过1 年，该行推测将以贴息金额为基础折算成累计消费金额。贴息资 金由中央和省级财政按90%、10%分担，流程上银行收息时先直接扣减贴息资金，再按季申领资金拨 付。 2025年3 月蓝佛安部长在十四届全国人大三次会议经济主题记者会上就2025 年财政支持消费做了四项重 点工作安排，除组织超长期特别国债资金3000 亿元(较2024 年翻番)支持消费品以旧换新外，新增重点 领域个人消费贷和部分民生服务领域经营贷贴息政策，前者拟通过减轻当期支出压力激发消费动力，后 者则通过降低融资成本、促进优质服务供给增加。7月31日国常会部署实施个人消费贷款贴息政策与服 务业经营主体贷 ...

Investment Rating - The investment rating for the company is "Outperform the Market" [5] Core Views - The company reported a strong performance in the first half of 2025, with revenue of 6.06 billion yuan, a year-on-year increase of 10.1%, and a net profit of 1.97 billion yuan, up 13.5% year-on-year, indicating stable growth [1] - The company is actively reducing the pace of credit expansion to solidify its foundation for smaller-scale operations, as retail credit demand remains weak [1][2] - The company has managed to maintain a stable non-performing loan ratio of 0.76% and a provision coverage ratio of 490%, which is better than its peers [2] Summary by Sections Financial Performance - In the first half of 2025, the company achieved a revenue of 6.06 billion yuan, a 10.1% increase year-on-year, and a net profit of 1.97 billion yuan, reflecting a 13.5% growth [1] - The total assets reached approximately 401.3 billion yuan, with total loans amounting to 251.5 billion yuan, marking a growth of 9.5% and 4.4% respectively compared to the beginning of the year [1] Deposit Management - The company’s deposit balance stood at 310.8 billion yuan, growing by 8.5% year-on-year, which is lower than the 14.0% growth seen in the same period last year [2] - The company is focusing on reducing high-cost long-term deposits and encouraging clients to shorten deposit terms to balance its asset-liability structure and lower deposit costs [2] Profit Forecast and Valuation - The forecast for net profit for 2025-2027 is set at 4.41 billion yuan, 5.21 billion yuan, and 6.17 billion yuan respectively, with year-on-year growth rates of 15.7%, 18.1%, and 18.4% [3] - The current stock price corresponds to a price-to-book (PB) ratio of 0.75x for 2025, 0.66x for 2026, and 0.58x for 2027, indicating a favorable valuation [3] Market Position - The company maintains a competitive edge in the small and micro-enterprise lending sector, with a comprehensive network in Jiangsu and opportunities for expansion into other provinces through village banks [3]

Core Viewpoint - The personal credit market in China is experiencing a divergence between banks and lending platforms, with banks facing increasing pressure on retail loan performance while lending platforms report strong growth in credit issuance and profitability [2][9]. Banking Sector - Banks, represented by institutions like China Merchants Bank (CMB), are struggling with retail loan performance, showing a retail non-performing loan (NPL) ratio of 1.01%, up 0.03 percentage points from the end of last year [2][3]. - CMB's retail loan balance decreased from 13.43 trillion yuan to 13.37 trillion yuan, with a mere 0.38% growth in retail loans during the first quarter, significantly lower than the 6.49% growth in corporate loans [3][4]. - The overall trend shows that all six major banks experienced a rare increase in personal loan NPL ratios, with one bank reporting a personal consumption loan NPL ratio of 12.37% [4]. - The asset quality pressure is attributed to economic downturns leading to higher unemployment and reduced income growth, impacting borrowers' repayment capabilities [4][10]. Lending Platforms - Lending platforms, such as Qifu Technology and Xiaoyin Technology, reported strong performance in the first quarter, with significant year-on-year growth in loan issuance, revenue, and net profit [5][6]. - For instance, Qifu Technology's loan balance increased by 2.38%, with a quarterly loan issuance of 88.89 billion yuan, reflecting a 15.76% year-on-year growth [5]. - The asset quality of these platforms remains stable, with most reporting a decrease in NPL ratios, and some platforms like Xiaoyin Technology showing a 63.45% increase in loan issuance [6][7]. - The overall performance of lending platforms contrasts sharply with banks, as they have adapted their risk preferences and improved their risk assessment systems, allowing for more agile responses to market conditions [9][10]. Market Dynamics - The relationship between lending platforms and banks has shifted, with lending platforms becoming the primary players (甲方) and banks taking a secondary role (乙方) in the lending process [8][10]. - Smaller banks are increasingly reliant on larger lending platforms for retail business expansion, often leading to unfavorable financial outcomes due to high funding costs and competitive pressures [10][11]. - New regulations have compressed interest rates for smaller lending platforms, creating challenges for their survival, while larger platforms continue to attract funding and maintain lower financing costs [11].