Lates News

Goldman Sachs released a report stating that China Merchants Bank's first-quarter provision for profit before pre-tax profit and net profit both fell by 4% and 2% respectively compared to the bank's expectations. The performance was mainly impacted by a 4 basis point higher-than-expected decrease in net interest margin and a 19% lower-than-expected investment income. Bank loans increased by 5% year-on-year, lower than the system loan growth of 7.4%. Loan provisions increased by 86% quarterly for loan reserves and decreased by 72% for non-loan asset reserves. The growth rate of non-performing loans exceeding the loan growth rate indicates a slightly higher formation rate of non-performing loans, posing challenges to asset quality. The bank believes that China Merchants Bank's performance in the first quarter, with mixed results, shows discipline in a possible downward cycle, such as slowing loan growth and higher provisions for loans, but the lower-than-expected loan growth in the first quarter indicates that loan growth will accelerate in the coming months. Tariff policies may weaken credit demand and worsen asset quality. Quarterly earnings per share fell by 2% year-on-year, and the bank needs to increase the dividend payout ratio to maintain a stable annual dividend per share. The bank maintains a "buy" rating on China Merchants Bank based on its ability to enhance shareholder returns and the potential recovery of consumer finance. The target price for H-shares is HK$47.62.