China Merchants Bank (3968) Q3 2024 earnings summary

Executive summary

• Net operating income for the first three quarters was CNY 252.6 billion, down 2.93% year-over-year; net profit attributable to shareholders was CNY 113.18 billion, down 0.62% year-over-year, with narrowing declines compared to H1.

• ROAA and ROAE remained strong at 1.33% and 15.38%, respectively.

• Asset quality remained stable with an NPL ratio of 0.94%, down 0.01 percentage point from year-end 2023.

• Retail AUM reached CNY 14.34 trillion, up CNY 1.02 trillion from year-end, and retail customer base grew to 206 million.

• Total assets reached CNY 11.65 trillion, up 5.68% from year-end; total deposits rose 7.08% to CNY 8.73 trillion.

Financial highlights

• Net interest income for January–September 2024 was CNY 157.3 billion, down 3.07% year-over-year; net non-interest income was CNY 95.31 billion, down 2.70%.

• NIM for the first three quarters was 1.99%, down 20 bps year-over-year, but the decline narrowed.

• Operating expenses were CNY 82.17 billion, with a cost-to-income ratio of 29.59%, down 0.5 percentage points.

• Fee and commission income was CNY 55.7 billion, down 16.9%; wealth management fee income fell 27%, but the rate of decline narrowed.

• Net cash generated from operating activities surged 435.40% year-over-year to CNY 287.23 billion.

Outlook and guidance

• Management expects stable operations with potential for improved results, but notes ongoing uncertainties from policy and market conditions.

• NIM is expected to face continued downward pressure in 2025, but the rate of decline should narrow.

• Loan growth in 2025 is anticipated to improve over 2024, with a focus on retail and corporate loans aligned with national policy priorities.

• Plans to support new real estate development models and increase lending to “whitelist” projects.

• Will focus on risk monitoring in key sectors, optimize customer structure, and actively dispose of non-performing assets to maintain asset quality.