Investment Rating - The investment rating for the company is "Outperform the Market" [5] Core Views - The company has shown a clear bottom in its performance, with revenue reversing the declining trend of the past two years, achieving a revenue of 337.5 billion yuan in 2025, a year-on-year growth of 0.01%, and a net profit attributable to shareholders of 150.2 billion yuan, up 1.2% year-on-year [1] - The company has a strong customer base, with retail customers reaching 224 million, a growth of 6.67% year-on-year, and high-net-worth clients increasing by 13.29% [2] - Asset quality remains stable, with a non-performing loan ratio of 0.94%, unchanged from the previous quarter and down 1 basis point from the beginning of the year [3] Financial Performance - In 2025, net interest income and fee income grew by 2.0% and 4.4% year-on-year, respectively, reversing the decline seen in 2024 [1] - The total assets at the end of the period reached 13.07 trillion yuan, with total loans and deposits growing by 7.56% and 8.13% year-on-year, respectively [1] - The wealth management business generated revenue of 44.01 billion yuan in 2025, a year-on-year increase of 16.9%, accounting for 13.04% of total revenue [2] Asset Quality - The company maintains a high provision coverage ratio of 392%, despite a decrease of approximately 14 percentage points from the previous quarter [3] - The retail loan non-performing ratio increased to 1.06%, primarily due to a rise in small and micro enterprise loans [3] Earnings Forecast - The company is expected to achieve net profits of 154.8 billion yuan, 162.4 billion yuan, and 173.0 billion yuan for the years 2026, 2027, and 2028, respectively, with growth rates of 3.1%, 4.9%, and 6.5% [3][4]

Investment Rating - The investment rating for the company is "Outperform the Market" [5] Core Views - The company has shown a clear bottoming in performance, with revenue reversing the declining trend of the past two years, achieving a revenue of 337.5 billion yuan in 2025, a year-on-year growth of 0.01%, and a net profit attributable to shareholders of 150.2 billion yuan, a year-on-year increase of 1.2% [1] - The company has a strong customer base, with retail customers reaching 224 million, an increase of 6.67% year-on-year, and high-net-worth clients growing by 13.29% [2] - Asset quality remains stable, with a non-performing loan ratio of 0.94%, unchanged from the previous quarter and down 1 basis point from the beginning of the year [3] Financial Performance - In 2025, net interest income and fee income grew by 2.0% and 4.4% year-on-year, respectively, reversing the decline seen in 2024 [1] - The total assets at the end of the period reached 13.07 trillion yuan, with total loans of 7.26 trillion yuan and total deposits of 9.84 trillion yuan, reflecting growth rates of 7.56%, 5.37%, and 8.13% respectively [1] - The wealth management business generated revenue of 44.01 billion yuan in 2025, a year-on-year increase of 16.9%, accounting for 13.04% of total revenue [2] Profit Forecast and Financial Indicators - The company forecasts net profits of 154.8 billion yuan, 162.4 billion yuan, and 173.0 billion yuan for 2026, 2027, and 2028, respectively, with growth rates of 3.1%, 4.9%, and 6.5% [3][4] - The price-to-book (PB) ratios for 2026, 2027, and 2028 are projected to be 0.83x, 0.76x, and 0.70x, respectively [3]

Core Viewpoint - Despite industry challenges such as narrowing net interest margins and slowing profit growth, China Merchants Bank (CMB) reported a 0.25% increase in net profit for the first half of 2025, demonstrating operational resilience in a complex environment [2][4]. Financial Performance - CMB achieved operating income of 169.97 billion yuan in the first half of 2025, a year-on-year decrease of 1.72% [2]. - The bank's net profit attributable to shareholders reached 74.93 billion yuan, reflecting a slight increase of 0.25% year-on-year [2]. - The bank's return on assets (ROA) and return on equity (ROE) were 1.21% and 13.85%, respectively, both showing a decline compared to the previous year [4]. Revenue Structure - Net interest income for the first half was 106.09 billion yuan, up 1.57% year-on-year, while non-interest income was 63.84 billion yuan, down 6.77% [3]. - Wealth management income showed strong recovery, with "big wealth management income" increasing by 5.45% to 20.86 billion yuan, marking the highest growth rate in nearly three years [3][9]. Asset Quality - As of June 30, 2025, CMB's non-performing loan balance was 66.37 billion yuan, with a non-performing loan ratio of 0.93%, a slight decrease from the end of the previous year [5]. - The provision coverage ratio stood at 410.93%, down 1.05 percentage points from the end of the previous year [5]. Net Interest Margin - CMB's net interest margin was 1.88%, down 0.12 percentage points year-on-year, but still above the industry average by 46 basis points [6]. - The bank's average cost of customer deposits was 1.26%, significantly lower than the industry average [6]. Retail Business Resilience - CMB's total assets under management (AUM) for retail customers exceeded 16 trillion yuan, a 7.39% increase from the beginning of the year [9]. - Retail customer deposits reached 4.02 trillion yuan, up 4.99% from the end of the previous year [9]. - The number of retail customers grew to 216 million, a 2.86% increase year-on-year [10].

Core Viewpoint - The performance of listed banks in the first half of 2025 shows marginal improvement, with both revenue and profit returning to positive growth, indicating a positive trend in core revenue capacity [1][2]. Revenue and Profit Growth - In 1H25, listed banks' operating revenue increased by 1.03% year-on-year, reversing from negative growth, primarily due to a recovery in the bond market and improved non-interest income [2]. - The net interest income decreased by 1.3%, but the decline is narrowing, supported by reduced costs on the deposit side [2][3]. - The net profit attributable to shareholders of listed banks grew by 0.8% year-on-year in 1H25, with state-owned banks seeing a slight decrease of 0.13% [3]. Asset and Loan Growth - The total assets of listed banks grew by 9.6% year-on-year in 2Q25, with loans increasing by 8.0%, primarily driven by corporate loans [4]. - The proportion of corporate loans, retail loans, and bill discounts in the incremental loans for 1H25 were 84.6%, 13.0%, and 1.2%, respectively [4]. Deposit and Liability Trends - In 2Q25, the liabilities and deposits of listed banks grew by 9.6% and 8.4% year-on-year, respectively, with a slight decrease in the proportion of deposits to total liabilities [5]. - The trend towards more fixed-term deposits is slowing down, with the proportion of demand deposits decreasing slightly [5]. Net Interest Margin and Non-Interest Income - The net interest margin for listed banks decreased by 5 basis points to 1.48% in 2Q25, but is expected to stabilize as deposit costs continue to optimize [6]. - Non-interest income increased by 7% year-on-year in 1H25, with significant improvements in both fee income and other non-interest income [6][8]. Wealth Management and Other Non-Interest Income - Wealth management income for listed banks grew by 13% year-on-year in 1H25, marking the first positive growth since 2022, with state-owned and joint-stock banks showing significant improvements [7]. - Other non-interest income saw a year-on-year increase of 10.7% in 1H25, driven by improved market conditions and the realization of investment gains [8]. Asset Quality and Risk - The non-performing loan ratio remained stable at 1.23% in 2Q25, with a slight increase in the provision coverage ratio, indicating stable risk compensation capabilities [9]. - Risks in retail, credit card, and small micro-enterprise loans continue to be a concern, despite improvements in corporate loan quality [9]. Dividend Outlook - As of now, 24 banks are planning mid-year dividends for 2025, with 17 banks already announcing their plans, maintaining a stable dividend rate for major state-owned banks [10]. Future Outlook - The banking sector is expected to maintain stable growth in scale, with net interest margins likely to narrow due to lower interest rates [11]. - The performance of non-interest income is anticipated to continue improving, while asset quality remains a key focus area, particularly in retail and small micro-loan segments [11].