China Merchants Bank (3968) investor relations material

Executive summary

• Net profit attributable to shareholders reached RMB74.93 billion, up 0.25% year-on-year, despite a 1.73% decline in net operating income to RMB169.92 billion.

• Total assets increased 4.16% to RMB12.66 trillion, with loans and advances up 3.31% and customer deposits up 3.58%.

• Asset quality remained strong, with NPL ratio at 0.93%, allowance coverage at 410.93%, and allowance-to-loan ratio at 3.83%.

• Retail finance contributed over 55% to both net operating income and profit, maintaining strategic dominance.

• Capital adequacy ratios remained above regulatory requirements, with Core Tier 1 at 14.00% and Tier 1 at 17%.

Financial highlights

• Net interest margin (NIM) at 1.88%, down 12 bps year-on-year, but still above industry average.

• Net interest income rose 1.57% year-on-year to RMB106.09 billion, while noninterest income fell 6.77% to RMB63.84 billion.

• Return on average assets (ROAA) was 1.21%, and return on average equity (ROAE) was 13.85%, both declining year-on-year.

• Cost-to-income ratio stable at 30.11%.

• Credit cost ratio (annualized) decreased to 0.67% from 0.77% year-over-year.

Outlook and guidance

• Net interest margin expected to remain under pressure in H2 2025 due to low interest rates and deposit structure shifts.

• Focus on high-quality growth, digital transformation, and risk management, with continued expansion in retail, technology, green, and inclusive finance.

• Plans to accelerate internationalization, comprehensive operations, and digital intelligence initiatives.

• Non-interest income growth to be driven by wealth management, corporate finance, and asset management innovation.

• Continued emphasis on prudent risk management and maintaining asset quality.