On the evening of March 25, China Merchants Bank (600036. SH) has published its 2023 annual report.
The king of retail has stabilized its own performance ballast, and the overall performance of the retail business can be called stable. In the case of insufficient overall demand for retail credit in 2023, the growth rate of CMB's retail credit is already very impressive, which also shows that the foundation of CMB's retail customer base is still good.
However, the wealth management business, which had high hopes, still failed to "catch up", and revenue continued to decline. The challenges of China Merchants Bank's large wealth management strategy remain great. Judging from the macro economy and the bank's previous statement, the large wealth management strategy can be said to be a phased "flameout", so this performance is expected.
01
Interest margins declined, revenue was under pressure
According to the financial report, as of the end of 2023, the total assets of China Merchants Bank were about 11.03 trillion yuan, an increase of 8.77% from the end of the previous year, and the total loans were about 6.51 trillion yuan, an increase of 7.56% from the end of the previous year. The total liabilities were 9.94 trillion yuan, an increase of 8.25% from the end of the previous year. The total deposits were 8.16 trillion yuan, an increase of 8.22% from the end of the previous year.
In 2023, China Merchants Bank will achieve revenue of 339.123 billion yuan, a year-on-year decrease of 1.64%, and a net profit of 146.602 billion yuan, a year-on-year increase of 6.22%. In 2023, China Merchants Bank will achieve net interest income of 214.669 billion yuan, down 1.63% year-on-year, and non-interest net income of 124.454 billion yuan, down 1.65% year-on-year.
Lower interest income due to lower net interest margin increased revenue pressure. In 2023, CMB's net interest margin will be 2.15%, down 25 basis points year-on-year.
Regarding the decline in interest margins, China Merchants Bank said in its annual report that on the asset side, the LPR continued to decline and the demand for effective credit was insufficient, which led to a downward trend in the pricing of new loans, driving the average yield of loans to decline year-on-year. In addition, residents' willingness to consume and buy houses needs to recover further, and the growth of credit card loans and personal housing loans with relatively high yields is sluggish. On the liability side, the wealth attribute of savings deposits has been strengthened, the proportion of deposits in demand has decreased, and the debt cost ratio has increased.
However, the decline in the interest rate spread of China Merchants Bank is also expected by the market. The combination of interest rate cuts, loan repricing, and declining loan yields has led to a narrowing of net interest margins as a general trend in the banking industry in 2023.
In this regard, China Merchants Bank put forward a countermeasure strategy at the beginning of 2023 - to increase business increment and increase non-interest income.
02
Retail finance is generally sound
In the face of revenue pressure, the top priority for China Merchants Bank, which is good at retail, is to stabilize the retail financial business and make good use of its own advantages.
Overall, CMB's retail finance business performed steadily in 2023, with both retail customers and total assets of retail customers maintaining growth.
As of the end of 2023, the total number of retail customers of China Merchants Bank reached 197 million, an increase of 7.07% from the end of the previous year, the balance of total retail assets reached 13.32 trillion yuan, an increase of 9.88% from the end of the previous year, and the balance of retail customer deposits reached 3,314.318 billion yuan, an increase of 12.13% from the end of the previous year.
In 2023, CMB's retail finance business will achieve revenue of 190.167 billion yuan, a year-on-year increase of 0.89%, accounting for 61.85% of total revenue.
As of the end of 2023, the balance of retail loans of China Merchants Bank was about 3.37 trillion yuan, an increase of 8.49% from the end of the previous year. Among them, retail small and micro loans were 749.773 billion yuan, an increase of 19.08% over the end of the previous year, and the balance of consumer loans was 301.538 billion yuan, an increase of 49.11% over the end of the previous year.
In 2023, China Merchants Bank took the initiative to adjust the structure of retail loans and increased the allocation of small and micro loans and consumer loans. However, CMB's credit card business will not perform well in 2023.
As of the end of 2023, there were 97,118,100 credit cards in circulation, down 5.44% from the end of the previous year, and 69,740,400 credit cards in circulation, down 0.37% from the end of the previous year.
In 2023, the transaction volume of China Merchants Bank's credit cards will be 4.81 trillion yuan, a year-on-year decrease of 0.44%, the interest income of credit cards will be 63.515 billion yuan, a year-on-year decrease of 0.72%, and the non-interest income of credit cards will be 27.228 billion yuan, a year-on-year decrease of 3.02%.
Therefore, in terms of credit card operation, China Merchants Bank proposed to carry out the transformation of customer acquisition strategy, enrich the card product system, focus on installment asset management, and innovate the post-loan process of automobile installment.
03
Wealth management business fails to "come up"
The performance of the wealth management business, which was highly anticipated by China Merchants Bank, was not so satisfactory.
In 2023, the revenue of China Merchants Bank's large wealth management will be 45.268 billion yuan, a year-on-year decrease of 7.9%. Among them, wealth management fees and commission income was 28.466 billion yuan, a year-on-year decrease of 7.89%.
China Merchants Bank proposes to "expand the capital-light business", and the wealth management business is the core of its capital-light business. China Merchants Bank has also put forward a large wealth management strategy, and the wealth management business shoulders the task of the second growth point of China Merchants Bank.
However, the decline in wealth management business income did not make CMB change its strategy of increasing non-interest income.
In its 2023 annual report, China Merchants Bank stated that it plans to promote the growth of non-interest net income through three measures: first, continue to promote the development of large wealth management business, pay equal attention to the expansion of wealth management customer base and tap potential, increase product innovation, tap the asset allocation potential of key customers, pay close attention to the recovery opportunities of the equity market, optimize the product structure of insurance, funds, wealth management and other products, and increase the contribution of wealth management fees and commission income; The third is to strengthen market research and judgment and professional capacity building, closely follow the needs of enterprises, make arrangements in advance, improve the integrated service system, and enhance the contribution of the company's finance, investment banking and financial market sectors to non-interest net income.
In terms of asset quality, China Merchants Bank's asset quality remained generally stable, with a non-performing ratio of less than 1%.
As of the end of 2023, the balance of non-performing loans of China Merchants Bank was 61.579 billion yuan, an increase of 3.575 billion yuan from the end of the previous year, and the non-performing loan ratio was 0.95%, a decrease of 0.01 percentage points from the end of the previous year.
It is worth noting that China Merchants Bank's new non-performing is also declining. In 2023, China Merchants Bank will generate new non-performing loans of 60.997 billion yuan, a year-on-year decrease of 1.978 billion yuan, and the non-performing loan generation rate will be 1.03%, a year-on-year decrease of 0.12 percentage points. However, the new non-performing loans are mainly concentrated in the retail business. The non-performing generation of retail loans (excluding credit cards) was 9.163 billion yuan, an increase of 848 million yuan year-on-year, and the non-performing generation of credit cards was 38.710 billion yuan, an increase of 1.888 billion yuan year-on-year.
It can be seen that in 2024, the pressure on CMB's retail loans is not small.