Directly hit the performance meeting of CMB, Wang Liang listed five "maintain" and five "enterprising"

"On the whole, we summarize the fundamentals of the first half of the year as the foundation has not changed, the foundation is very thick, and the confidence is sufficient." Wang Liang, president of China Merchants Bank, said at the bank's 2023 interim results exchange meeting.

Prior to this, China Merchants Bank disclosed that the 2023 half-year report showed that the bank's operating income in the first half of the year was 178.46 billion yuan, a slight decrease year-on-year, and the net profit increased by 9.2% year-on-year to 76.44 billion yuan, both of which rebounded from the first quarter.

Among them, after the first quarter's efforts to the public front, the incremental contribution of CMB's retail loans increased significantly in the second quarter, and the incremental retail loans in a single quarter reached a new high, driving the contribution of retail revenue in the first half of the year to more than 55%.

Five "Keep" and Five "Aggressive"

"Since I have such a foundation and such a foundation, I will consider how CMB can continue to maintain such a basic market in the medium and long term." Wang Liang said. In Wang Liang's view, if the five-point advantage can be maintained, CMB will still maintain the background:

The first is to continue to maintain a high ROE (return on equity) level. In the first half of the year, CMB's weighted average ROE reached 17.55%, continuing to lead listed banks.

The second is to continue to maintain a high risk compensation capacity. At the end of June, CMB's provision coverage ratio was close to 450%, ranking among the top listed banks.

The third is to continue to maintain the endogenous capacity of capital. Through capital-light operation, CMB has not refinanced ordinary shares for ten consecutive years.

Fourth, continue to maintain a relatively low non-performing loan ratio and maintain relatively good asset quality. At the end of June, CMB's "non-performing + concern" loans accounted for about 1.97%, down 0.2 percentage points from the beginning of the year.

Fifth, continue to maintain a good business structure, including maintaining retail as the main body, maintaining the leading proportion of non-interest income, and maintaining low capital costs.

"You can't just keep it, you can't keep it without being aggressive." Wang Liang believes that while maintaining the background, CMB should focus on strengthening in five aspects to create the ability and level of sustainable value creation for shareholders:

First, we must rely on management to win. "Gone are the days when banks used to rely on extensive management, high spreads, and it was easier to make money. Now we must improve the level of refined management, and obtain profits by controlling costs, controlling various businesses, and controlling risks."

The second is to rely on science and technology empowerment. It is necessary to increase investment in science and technology, digital transformation, and intelligent operation. "In the past, digitalization paid more attention to the retail sector and strengthened the development of mobile apps. Now that the cloud migration is complete, we now have the financial resources and manpower to invest in the digital transformation of the company's business. ”

The third is to be innovation-driven. "CMB's past development has been to maintain innovation and be at the forefront at every different stage to gain a first-mover advantage. To solve the current dilemma of weak revenue growth and narrowing spreads, innovation is also needed to get ahead. ”

Fourth, regional strategies. "Last year, we proposed to further implement the regional development strategy, especially focusing on regions and provinces such as the Yangtze River Delta, Pearl River Delta, Chengdu-Chongqing, and Haixi, increasing the market share of CMB in these places, and allowing branches in these regions to create greater contributions to CMB. Although it was not long, it was beginning to bear fruit. ”

The fifth is to create new advantages in subdivided fields. At the beginning of the year, CMB proposed to focus on the transformation and upgrading of modern industrial economy, and create seven characteristic advantages of digital finance, technology finance, green finance, intelligent finance, cross-border finance, inclusive finance and industry finance.

The three-point business logic of asset organization

As of the end of June, CMB's assets reached 10.74 trillion yuan, an increase of 5.9% over the beginning of the year, of which the growth rate of loans was slightly lower than the growth rate of the bank's assets, and the proportion of loans in total assets also declined.

Structurally, on the basis of the increase of more than 280 billion yuan in the first quarter, the increase in CMB loans in the second quarter was less than 20 billion yuan, the lowest single quarter since 2019.

However, at the same time, the bank's retail loan increase in the second quarter exceeded 92 billion yuan, a new stage high, in sharp contrast to the situation that the increase in retail loans accounted for less than 30% in the first quarter. Based on comprehensive calculations, the proportion of CMB's retail loan increment in the first half of the year has risen to more than 55%.

Wang Liang believes that CMB has achieved very good results in asset organization in the first half of the year, and at the same time, he has three personal experiences:

First, the business logic of assets determining liabilities has become increasingly obvious. In the first half of the year, the average annual daily balance of customer deposits of CMB increased by more than 870 billion yuan, customer loans increased by more than 300 billion yuan, and the scale of bond investment increased by more than 200 billion yuan.

"If assets cannot be effectively allocated, the increase in liabilities may become higher costs and may not achieve the benefits it should, so the decisive role of assets on liabilities is becoming more and more obvious." Wang Liang said.

Second, banks' asset portfolio management capabilities are becoming increasingly important. "We must seek a balance in several aspects such as loans, investments, and interbank capital financing to achieve a comprehensive balance of liquidity, safety and profitability."

Wang Liang said that in the first half of the year, CMB's loan investment continued to be dominated by retail loans, including small and micro loans and consumer loans to make up for the gap in mortgage investment; In terms of public loans, manufacturing, inclusiveness, technology finance, and green finance all showed a good growth trend.

Third, we must insist on commercial sustainability, and cannot maintain the growth of loan volume at the expense of commercial interests. "When evaluating whether loan growth is feasible, we should not only look at the security of the loan, but also look at whether the pricing level can create value, so we insist that the loan pricing level should cover four major types of costs: capital cost, risk cost, operating cost and capital cost."

Wang Liang revealed that based on rational and scientific loan pricing, many asset businesses that did not conform to CMB's operating logic were eliminated, "which led to a situation where public loans showed a good growth trend in the first quarter, but slowed down in the second quarter." ”

"We should be correct for CMB to promote the allocation of assets according to the above three business logics. As for the current situation, should the growth rate of assets be maintained at a moderate level? In accordance with CMB's consistent business philosophy, we must adhere to the principles of quality first, moderate scale and efficiency first. Wang Liang concluded.

Two points to create a big retail advantage

According to the disclosure, the contribution of CMB's retail business to operating income and pre-tax profit rose to more than 55% in the first half of the year. As of the end of June, the bank's retail AUM (assets under management) exceeded 12.8 trillion yuan, an increase of 5.9% from the beginning of the year.

At the same time, the bank's retail customer base continues to grow. At the end of June, CMB's total retail customers reached 190 million (including debit and credit card customers), an increase of 3.3% from the beginning of the year. Among them, the growth rate of golden sunflower and above customers and private banking customers was 7.2% and 6.2% respectively.

However, compared with the past, the current development of retail is not a period of upward trend, but a period of adjustment in adversity. Wang Ying, assistant to the president of CMB, said that the future focus of CMB retail is not a single force, but an overall force.

"Once a leader in wealth management, private banking, credit cards, retail credit, we will continue to consolidate and improve; It is also necessary to create advantages for some emerging fields, such as pension finance, buy-side investment advisory, family trusts and family offices. Wang Ying said.

Wang Ying believes that a single strength is not enough to support the retail system, and only "how strong" can promote each other and make the overall retail stronger. In addition, both CMB Retail and China's banking retail are just getting started, and there is no reason or choice to give up what to give up and what to focus on.

How to evaluate the advantages achieved by the segment? "We are doing 3-5 years of planning, and there will be clear quantitative requirements and evaluations, mainly what level of contribution each area will reach in the industry and what level of share it will reach in the whole market." Wang Ying revealed.

Among them, each segment has different business development paths and has common points. Wang Ying said that CMB will make overall efforts based on two aspects to create common advantages of large retail:

The first is to do a good job in improving quantity and quality. In terms of volume, we will continue to consolidate the base of retail customers, improve the ability of 10,000 wealth management account managers to serve tens of millions of customers, and expand the cooperation between the open platform and more than 350 asset management institutions; In terms of quality, we will continue to build and build four systems and one support, including product system, resource distribution system, human + digital system, network + remote + App channel service system, and scientific and technological support.

Second, the effort to build retail is not only within retail, but also outside retail. Balance is one of the key meanings of CMB to build a value bank, only when the company, investment, wealth management and asset management are very strong, retail will further become bigger and stronger; If the rest of the sectors are not strong, retail will encounter a bottleneck in development.

Wang Ying said that CMB will still invest huge resources and strength in retail and wealth management, and hopes that retail finance will remain unchanged as the chassis and strategic subject of CMB.

"We hope that the scale of retail asset business, retail revenue and profit contribution, and non-interest income contribution will grow to about 60% in the future on the basis of maintaining more than 50% at present, and the double A coefficient will continue to grow from 1.2 to higher." She said.

Steadily promote the adjustment of existing housing loan interest rates

In the value creation chain of "increment-income-efficiency-value-added" proposed by Wang Liang, the key is risk management.

In the first half of the year, CMB increased its efforts to write off non-performing loans, and the non-performing loan ratio fell slightly to 0.95% at the end of June, and the balance and proportion of concerned loans decreased significantly for two consecutive quarters. From the perspective of industry, the non-performing generation in the first half of the year was mainly concentrated in the real estate industry.

Zhu Jiangtao, vice president of CMB, said at the performance exchange meeting that the bank's real estate non-performing loans generated in the first half of the year was 4.8 billion yuan, a sharp decrease year-on-year; It is expected that the second half of the year will increase slightly compared with the first half, and it will decrease year-on-year, and there will be a relatively significant decrease in non-performing production throughout the year.

"Our overall judgment on CMB's real estate risk is that the peak of real estate non-performing loans should be in 2022. If we judge more optimistically, there is a high probability that the inflection point of the non-performing loan ratio of our bank's real estate industry will appear within this year. Zhu Jiangtao thought.

He also mentioned CMB's cooperation with Country Garden and its risk exposure. Among them, the amount of cooperation is not specifically disclosed, but "basically matches the market position of CMB", and the specific structure is:

First, CMB's domestic proprietary business exposure accounts for 87% of the total cooperation amount, which is basically project financing, and the coverage multiple of the value of the project to the debt is more than 1.5 times. "In the future, we will continue to pay attention to risks and further strengthen the management of the project side."

The second is the exposure of overseas proprietary business, which accounts for 5%, mainly overseas syndicated loans, and the guarantee method is credit. "Once the entity defaults, the risk of this part of the business is relatively large."

The third is the business that does not bear credit risk, accounting for 8%. Among them, private bank agency sales accounted for 4%, and this business is likely to be recovered and settled within the year; Investment in wealth management standardized products accounts for 4%, and the risks of this part of the business have been reflected in the fluctuation of the net value of the product end.

Peng Jiawen, assistant to the president of CMB, responded to the topic of interest rate adjustment of existing housing loans at the meeting. He said that CMB has formulated corresponding plans, but considering the need to take into account city-specific policies, fairness, system support and other issues, there is no final plan. "On the whole, we will steadily promote implementation under the guidance of the central bank in accordance with the principles of marketization and legalization."

Peng Jiawen also revealed that some optimistic, neutral and unfavorable scenarios within CMB have measured the impact of the adjustment of existing mortgage interest rates, and "from the results of the calculation, it is still controllable and should still be in our grasp."

He also cautioned that do not blindly see the negative impact on short-term finances, and the adjustment of interest rates on existing mortgages also has its positive impact:

First, with the reduction of the interest rate of existing housing loans, the prepayment of the entire housing loan will be digested to a certain extent, which in turn will lead to the growth of housing loans;

Second, with the reduction of the interest rate of existing housing loans, to a certain extent, it will enhance customer viscosity and further deepen customer operations, which will be beneficial to the growth of retail business.

Responsible editor: Gui Yanmin

Proofreader: Su Huanwen

Source: Brokerage China