China Merchants Bank (3968) Q2 2024 earnings summary

Executive summary

• Maintained sound profitability and stable asset quality amid a complex macro environment, with net operating income at RMB 172.92 billion (down 3.11% YoY) and net profit at RMB 74.74 billion (down 1.33% YoY).

• Total assets reached RMB 11.57 trillion, up 4.95% from year-end 2023; total loans grew 3.67% to RMB 6.75 trillion.

• Asset quality remained stable, with NPL ratio at 0.94% (down 0.01 ppt) and allowance coverage at 434.42%.

• Focused on value creation, high-quality development, and balanced growth across retail, corporate, investment banking, and asset management.

• Retail business continued to be a key driver, accounting for over half of operating income and profit.

Financial highlights

• Net interest income: RMB 104.45 billion, down 4.17% YoY; NIM at 2%, down 23 bps YoY but above industry average.

• Net non-interest income: RMB 68.47 billion, down 1.43% YoY; net fee and commission income fell 18.61% YoY.

• Cost-to-income ratio increased to 29.75%, up 0.68 ppt YoY; operating expenses nearly flat.

• Allowance coverage ratio: 434.42%; allowance-to-loan ratio: 4.08%.

• Total deposits: RMB 8.66 trillion, up 6.22%; core deposits accounted for 86.2% of total.

Outlook and guidance

• Net interest margin expected to remain under pressure in H2 2024 due to low rates and shift to time deposits.

• Will focus on growing low-cost core deposits, optimizing asset structure, and supporting key sectors such as green finance and inclusive finance.

• Asset quality expected to remain stable, though retail and micro-finance loan risk may rise; prudent risk management and selective growth in quality segments.

• No interim dividend payout planned; future decisions will consider capital adequacy and business needs.

• Macroeconomic recovery and policy support are expected to provide a favorable environment for stable growth.