Company Reports

China Merchants Bank's, or CMB's, second-quarter revenue and profit growth accelerated to 6% and 3%, respectively, from 4% and 2% in the first quarter.

China Merchants Bank stands out thanks to its leading position in retail banking and an enviable funding cost advantage, which delivers one of the strongest returns on assets among peers. We expect its well-positioned customer base will allow CMB to deliver above-peer equity return during cyclical downturns.

China Merchants Bank, or CMB's first-quarter revenue and profit growth increased to 4% and 2%, respectively, from flat and 1% in 2025.

China Merchants Bank's fourth-quarter revenue and net profit growth accelerated to 1.6% and 3.4%, bringing full-year revenue and profit to flat and up 1.2% respectively.

China Merchants Bank released its 2025 preliminary results, with zero growth in total revenue and 1.35% rise in net profit.

Industrial and Commercial Bank of China held an Investor Day on Nov. 26, highlighting recent trends in net interest margin, or NIM, demand from corporate and inclusive finance sectors, and potential in the overseas banking segment.

China Merchants Bank's first nine-month net profit growth improved to 0.5%, with year-on-year contraction in revenue narrowing to 1% on accelerating growth in net interest and fee incomes.

China Merchants Bank, or CMB, reported a 2% year-on-year revenue decline in the first half, while net profit was flat. Narrower contraction in investment and fee income growth drove only marginal improvement.

China will reinstate a 6% value-added tax on interest income from treasury bills, local government bonds, and financial institution notes issued after Aug. 8. These had been exempt since 2016.

We update our cost of equity assumptions for China Merchants Bank to reflect a combination of recent industry developments, including weaker-than-expected year-to-date loan growth, a modest May interest rate cut, and policies aimed at curbing pricing competition among banks.

China Merchants Bank stands out thanks to its leading position in retail banking and an enviable funding cost advantage, which delivers one of the strongest returns on assets among peers. We expect its well-positioned customer base will allow CMB to deliver above-peer equity return during cyclical downturns.

China Merchants Bank's first-quarter revenue and net profit fell 3% and 2%, respectively, year on year.

We maintain our HKD 50/CNY 47 fair value estimate for China Merchants Bank. The shares fell 5.5% on March 26 after the earnings release but remain fairly valued, in our view. We think the lack of an increase in the bank’s dividend payout and growing retail loan risks may have somewhat disappointed investors, However, CMB is up 21% year to date and is the top-performing China bank that we cover, so some selling may not be too surprising. We would wait for a more attractive entry point before buying.

China Merchants Bank stands out thanks to its leading position in retail banking and an enviable funding cost advantage, which delivers one of the strongest returns on assets among peers. We expect its well-positioned customer base will allow CMB to deliver above-peer equity return during cyclical downturns.

We maintain our fair value estimate for China Merchants Bank at HKD 48 per H-share (CNY 45 per A-share) following its in-line third-quarter results. Year-to-date shareholders’ net profits contracted 0.6% year on year, but third-quarter net profit growth showed its first positive growth, rising 0.8% due to a narrowing in revenue contraction and improved operating efficiency. We expect revenue pressure to ease further in the fourth quarter and maintain our full-year revenue projection of negative 2% growth and our 2024 net profit growth at 1%. CMB’s H-shares appear undervalued, trading at around 0.9 times 2024 book value, with most risks already priced in. We consider CMB to be one of our preferred China banks. Given its high earnings sensitivity to the economic cycle, it stands to benefit from recent government efforts to boost the capital market. Additionally, CMB has increased dividend payments consistently over the past decade.

We retain fair value estimates for Bank of Communications, or BoCom, at HKD 6.0, China Merchants Bank, or CMB, at HKD 48, China Citic Bank, or Citic, at HKD 5.7, and China Minsheng Bank, or CMBC, at HKD 3.6 per H share. For Bank of Ningbo, or BONB, the FVE is CNY 27 per A share. The banks' interim results aligned with our expectations for net profit growth ranging from flat to low single digits in 2024. H shares of these banks appear undervalued, trading between 0.2 times-0.7 times 2024 book value, with attractive dividend yields of 6.5%-8.5%, except for BONB, with 3% dividend yield in A stock market. Despite weak net interest margin, or NIM, for CMB, we favor it due to its superior return on equity, steady dividends, and upside potential if consumer sentiment in China recovers.

China Merchants Bank stands out thanks to its leading position in retail banking and an enviable funding cost advantage, which delivers one of the strongest returns on assets among peers. We expect its well-positioned customer base will allow CMB to deliver above-peer equity return during cyclical downturns.

Driven by improved investor sentiment for China banks with stable dividend payments and a historic property rescue package introduced in May, the Hang Seng Mainland Banks Index rallied over 20% in the second quarter. But it pulled back sharply on profit-taking and investors’ concerns that the easing measures were not sufficient to turn around struggling property sales. H-shares of most China banks remain undervalued, with 2024 price/book modestly increasing to 0.2-0.5 times. Dividend yields remain attractive at 6%-8%. With A-share counterparts trading at a 35% premium to H-shares on average, we expect the regulators’ push for higher and more regular dividend payouts, as well as the expansion of eligible exchange-traded funds on Stock Connect, should gradually narrow the valuation gap for Chinese dual-listed banks. Amid sluggish economic growth in China with no major recovery in property sales and consumer spending anticipated in 2024, we prefer defensive state-owned banks, including China Construction Bank, or CCB, and Industrial and Commercial Bank of China, or ICBC, and leading retail-focused bank China Merchants Bank for stable dividends, strong capital returns, and better earnings visibility.

China Merchants Bank, or CMB, and China Minsheng Bank, or CMBC, reported a deeper year-on-year decline in first-quarter revenue of 5% and 7% versus the 2% and 1% decline in 2023. China Citic Bank’s results were stronger than expected, with revenue increasing 5% year on year, driven by stronger-than-expected growth in fee and investment income, which benefited from falling interest rates. The net profit trend weakened further, with net profit contracting 2% and 6% for CMB and CMBC, respectively, and increasing 0.4% for Citic, year on year.

China Merchants Bank stands out thanks to its leading position in retail banking business and enviable funding cost advantage, which delivers one of the strongest returns on assets among peers. We believe strong returns and competitive advantages endow it with a narrow economic moat.