China Merchants Bank Shares Fall After First-Quarter Results

By Yifan Wang

China Merchants Bank Co. shares fell in Hong Kong trading Thursday after the lender reported lower quarterly operating income.

The stock was recently 5.7% lower at 37.30 Hong Kong dollars (US$4.75).

China Merchants Bank late Wednesday posted a 1.5% decline in first-quarter operating income, the key top-line metric for lenders. Net interest income, its main source of revenue, rose by 1.7%, missing analysts' estimates for a 4.3% increase, according to a Visible Alpha poll.

Citi analysts said in a note that the income decline was in part a result of net-interest-margin pressure, likely due to cheaper mortgage loans made during the period, after China officials cut mortgage rates in a bid to shore up the country's struggling real-estate market.

Citi also identified weak fee income as one of the key negatives for the quarter. "Weakness [was] observed across wealth management, settlement and clearing, custodial, bank card fees, given customer risk appetite was low and investment sentiment remained weak," the analysts said.

Write to Yifan Wang at yifan.wang@wsj.com

(END) Dow Jones Newswires

April 26, 2023 23:20 ET (03:20 GMT)

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