China Merchants Bank: Mild Increase in Q4 Net Interest Margin but Loan Quality Still Under Pressure

While China Merchants Bank’s, or CMB’s, 2022 revenue and net profit growth of 4% and 15% year on year, respectively, were in line with its preliminary results, its results are nonetheless mixed. On positive notes, net interest margin and cost efficiency improved, and CMB’s return on equity expanded to an industry-leading level of 17.06%. However, in the fourth quarter, CMB’s fee income contracted 1% year on year, lagging the 2.5% and 20% growth of peers China Citic Bank and Ping An Bank, respectively. Overdue loan and special-mentioned loan balances reported larger-than-peer increases from 2021 levels.