On September 2nd, China Merchants Bank held a mid-year performance conference. Faced with the situation of declining revenue and profits, China Merchants Bank's President Wang Liang, Vice Presidents Wang Ying, Peng Jiawen, Zhong Desheng, and other executives addressed questions and answered analysts' inquiries.
China Merchants Bank's 2024 interim report shows that the bank achieved operating income of RMB 172.945 billion in the first half of the year, a year-on-year decrease of 3.09%; net profit attributable to the bank's shareholders was RMB 74.743 billion, a year-on-year decrease of 1.33%.
When asked about &#34;conversion of existing housing loans to mortgages,&#34; Wang Liang admitted that they have not received any relevant notifications, and the policy has not been confirmed yet.
<h2>Response to Narrowing Net Interest Margin: Confidence in the Future Net Interest Margin</h2>
The semi-annual report data shows that in the first half of this year, China Merchants Bank's net interest margin was 1.88%, a decrease of 24 basis points year-on-year; net interest income ratio was 2%, a decrease of 23 basis points year-on-year, with the second quarter at 1.99%, a decrease of 2 basis points for net interest margin and 3 basis points for net interest income ratio compared to the first quarter's 1.9% and 2.02% respectively.
&#34;Although the narrowing of the interest margin in the first half of the year has somewhat reduced, the pressure is still significant.&#34; China Merchants Bank Vice President Peng Jiawen said that in the first half of the year, the impact of asset repricing continued to be released, changes in supply and demand led to a decrease in asset prices, resulting in an overall decline in income. On the liability side, although the cost of deposits has decreased somewhat, it remains relatively rigid, and deposit competition is intensifying. This pressure will continue to exist in the future.
However, &#34;China Merchants Bank's net interest margin is showing two positive trends.&#34; Peng Jiawen believes that the quarterly comparison is gradually narrowing, and compared with the same period last year, the rate of decline continues to narrow, and this trend will continue in the third and fourth quarters. Although the pressure still exists, there will be marginal improvements, and if there are no major changes in the external environment, it is expected to gradually stabilize next year.
Peng Jiawen stated that there is confidence in the future net interest margin. On the one hand, the momentum of China's economic growth recovery is established, and it is expected that the supply-demand relationship will improve next year compared to this year. On the other hand, the interest margin for commercial banks in the first quarter was 1.54%, which is already a very low level. Regulators also attach great importance to this, and in the future, policies may pay more attention to both the asset and liability sides.
Peng Jiawen said that in addition to market factors, banks themselves need to take proactive measures. The impact of structure often exceeds that of asset pricing, which is also a test of the asset-liability management capabilities of commercial banks. In the future, in addition to managing asset-liability pricing, China Merchants Bank will focus on asset structure and pay more attention to controlling the level of interest margin through structural management.
<h2>Response to Asset Quality: Confident in Maintaining Stability and Controllability</h2>
As of the end of June, China Merchants Bank's non-performing loan balance was RMB 63.427 billion, an increase of RMB 1.848 billion from the end of the previous year; the non-performing loan ratio was 0.94%, a decrease of 0.01 percentage points from the end of the previous year; the provision coverage ratio was 434.42%, a decrease of 3.28 percentage points from the end of the previous year.
China Merchants Bank Vice President Zhong Desheng explained that the increase in attention to and overdue loans in the first half of this year is an industry-wide situation. Objectively, in the context of economic downturn, some industries are facing further liquidity pressure, leading to certain overdue situations in repayments. For example, the adjustment in the real estate industry is still ongoing, sales have not fully recovered, and customers are facing short-term liquidity pressures
At the end of the reporting period, the balance of real estate loans of the bank was RMB 303.906 billion, an increase of RMB 13.164 billion from the end of the previous year, accounting for 4.75% of the total loans and advances, an increase of 0.04 percentage points from the end of the previous year. Over 85% of the balance of real estate development loans is distributed in urban areas of first and second-tier cities. As of the end of June, the non-performing loan ratio of the real estate industry was 4.78%, a decrease of 0.23 percentage points from the end of the previous year.
Zhong Desheng stated that in the first half of 2024, China Merchants Bank's real estate loan business showed a decrease in proportion, stable risks, and sufficient provisions.
Looking ahead to the next stage, Zhong Desheng stated that uncertainties still exist in the current operating environment, and the challenges of risk management are increasing. &#34;Based on the current risk assessment and stress test we are conducting, we are confident that we can maintain asset quality at a stable and controllable level in the second half of the year.&#34;
<h2>Response to Retail Focus: Second-hand housing mortgage business and new energy vehicle credit card installment</h2>
As of the end of June, the non-performing loan balance of retail banking at CMB was RMB 32.042 billion, an increase of RMB 1.455 billion from the end of the previous year; the non-performing loan ratio was 0.90%, an increase of 0.01 percentage points from the end of the previous year.
Wang Ying, Deputy President of China Merchants Bank, stated that the quality control of retail credit assets will still face challenges in the second half of this year and in the future. The non-performing rate, attention rate, and overdue rate are expected to increase slightly, but the overall risk of retail credit is stable and controllable.
Regarding the focus of retail credit in the next stage, Wang Ying stated that in the mortgage business, second-hand housing is a new focus for CMB, while small and micro loans and consumer loans remain important. In the credit card business, the new focus is installment services. Car installment and new energy vehicle installment are new focus areas.
<h2>Response to Existing Housing Loans: No Notice Received Regarding Mortgage Conversion Business</h2>
Recently, there have been reports that relevant parties are considering further lowering the interest rates on existing housing loans or allowing mortgage conversions.
When asked about &#34;existing housing loan conversions,&#34; Wang Liang, President of CMB, stated that they have not received any relevant notices, and the policy has not been confirmed yet.
Wang Liang said, &#34;If the relevant policy is implemented, it will have a certain negative impact on the interest rates of existing mortgages in the banking industry. I believe that the macro-management department will conduct sufficient research and studies before implementing such a policy.&#34;
Personal mortgage loans are the best quality loans for banks. According to CMB's 2024 interim report, as of the end of June, the scale of CMB's individual housing mortgage loans was approximately RMB 13.7 trillion, accounting for 20.38% of the bank's loans, with a non-performing rate of 0.4%.
<h2>Response to Mid-term Dividends: Research and Promotion Plan</h2>
CMB has not yet carried out mid-term dividends this year. Regarding mid-term dividends, Wang Liang stated that China Merchants Bank has always attached importance to bringing value to investors and providing stable returns. Wang Liang stated that CMB will fully study and research mid-term dividend plans based on capital adequacy, performance development requirements, and investors' opinions in this regard.
Wang Liang stated that CMB will attach great importance to this research and also observe the effectiveness of mid-term dividends in other peer banks before making a decision
China Merchants Bank's 2023 profit distribution plan is to distribute a cash dividend of 1.972 yuan per share (including tax).
Authors of this article: Zhou Liang, Xu Xiaoxiao, Source: Shanghai Securities News, Original Title: &#34;Five Hot Topics! Responses from CMB Executives&#34;

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China Merchants Bank executives responded to the issue of declining revenue and profits at the mid-term performance release conference. President Wang Liang expressed confidence in the future net interest margin and emphasized the stability of asset quality. Although the net interest margin and net interest income rate decreased in the first half of this year, it is expected that the market supply and demand relationship will improve, and interest margin pressure will gradually decrease. China Merchants Bank will also focus on developing second-hand housing loans and new energy vehicle credit card installment businesses, as well as studying mid-term dividend plans

- China Merchants Bank held a mid-year performance conference on September 2. Despite a decrease in revenue and profits, top executives like President Wang Liang addressed analysts' questions. The bank's 2024 interim report revealed a 3.09% year-on-year decline in operating income to 1729.45 billion RMB and a 1.33% drop in net profit attributable to shareholders to 747.43 billion RMB.
- President Wang Liang mentioned uncertainties regarding the "stock housing loan to mortgage" policy, expressing confidence in future net interest margins despite a 24 basis point decrease. Vice President Peng Jiawen highlighted ongoing pressures on asset pricing due to supply-demand shifts affecting overall earnings. The bank aims to stabilize asset quality and control risks amid challenges in retail credit quality.
- China Merchants Bank's focus areas include second-hand housing loans and new energy vehicle credit card installments. The bank remains cautious about potential policy changes like the rumored adjustment in stock housing loan rates. The institution prioritizes value for investors and stable returns, with ongoing discussions on mid-term dividend plans based on capital adequacy and performance requirements.

Five major hot topics! China Merchants Bank executives have all responded