China Construction Bank (939) Q4 2019 earnings summary

Executive summary

• 2019 performance characterized as good, stable and sustainable; priorities included inclusive finance, fintech, mortgages and stronger risk management.

• Despite COVID-19 disruption, management expected reasonable 2020 business growth and investor returns.

Financial highlights

• Total assets reached CNY 25.14tn, up 9.53% YoY; liabilities were CNY 23.2tn, up 9.28%; net profit was CNY 269.2bn, up 5.32%.

• Current deposits represented 56.8% of deposits, up 1.31 percentage points YoY.

• 2019 NIM was 2.26%, down 5 bps from 2.31% in 2018; loan performance added 9 bps while deposit costs reduced NIM by 21 bps.

Outlook and guidance

• 2020 NIM forecast to decline by ~10 bps; management considered limiting the reduction to this level a good outcome.

• 2020 intermediary-fee income expected to face pressure, with growth below 2019 levels; discounted services supported affected industries.

• Asset quality expected to remain good and improve slightly, though management did not expect a major improvement.

• Management targeted steady growth through refined customer selection, loan pricing, deposit-cost management and risk controls.