On June 25, China Merchants Bank held its 2025 annual shareholder meeting in Shenzhen, where Wang Xiaoqing made his first public appearance as the proposed president. This marks his first systematic response to market concerns in a public setting since succeeding Wang Liang, who retired due to age.

At the shareholder meeting, Shi Dai, general manager of China Merchants Group, presided over the meeting as a director of China Merchants Bank. Meanwhile, Wang Xiaoqing, the party secretary of China Merchants Bank and proposed president, made his public debut alongside the new management team. Other executives present included Vice President and Chief Financial Officer Peng Jiawen, Vice President and Chief Risk Officer Xu Mingjie, and Chief Information Officer Zhou Tianhong.

Additionally, Chairman of China Merchants Bank Miao Jianmin was absent from the meeting due to other official duties.

In his speech, Wang Xiaoqing first mentioned that what he inherited from President Wang Liang was the result accumulated over 39 years by the staff of China Merchants Bank, which is a bank with a "fortress-like balance sheet."

Overall, the new leader of China Merchants Bank is attempting to convey a "stability first" message to the outside world.

"We must never use tomorrow's bad debts to offset today's revenue"

Wang Xiaoqing candidly acknowledged that the challenges currently facing China Merchants Bank include both common factors in the banking industry and its own structural factors.

Common factors include the decline in net interest margin during a low-interest-rate cycle, cost reductions, and rising retail non-performing loan rates.

The bank's structural factors include three aspects: the proportion of demand deposits is close to 50%, which is high among major banks, and there is relatively limited room for further reduction in liability costs in a low-interest-rate environment, while the asset side is also declining in line with overall market yields; the retail characteristics are prominent, with non-interest income accounting for nearly 36%, which is under greater pressure due to cost reductions; the contribution of retail lines in credit assets is relatively high, and when retail credit non-performing loans rise in phases, the impact is also greater.

These factors combined make the revenue and profit cycles of China Merchants Bank "slightly different" from the industry. Wang Xiaoqing bluntly stated that this "to some extent leads to differences in stock performance among banks in the first half of this year."

In response to the challenges, Wang Xiaoqing believes that "there is still much room for action in the next steps of operations." In terms of planning implementation, he mentioned four levels: making the plan more concrete and the path clearer; deepening and thoroughly understanding core businesses; removing implementation obstacles; and maximizing the motivation of 120,000 employees.

Regarding the core business of "refining and thoroughly understanding," he provided several specific directions. First is deepening existing customers. "Currently, we have 227 million individual customers and nearly 3.8 million corporate customers, among which there are still a considerable number of unmet needs. For these customers, how we can better provide products and services is both the responsibility of China Merchants Bank and an opportunity for us."

Second is wealth management. "In the low-interest-rate era, there is an extremely strong demand for wealth preservation and appreciation, especially after the phased adjustment in the real estate market, where people are focusing more on the wealth management market and capital markets. In the face of such huge market demand, we are fully capable of better consolidating our brand and advantages in the wealth management field." He believes that the resulting growth in non-interest income is "very promising."

Third is serving technology enterprises. Wang Xiaoqing cited the example of new energy battery companies: "Using traditional credit thinking to look at the existing 'three statements' of enterprises, 'Should we look? Yes, it's very important. But we also need to look at the future of the enterprise; we need to communicate with enterprises on the same channel." He stated that this raises higher requirements for the professional capability construction of China Merchants Bank, "it is our space for effort and also our growth point."

Fourth, focus on key regional branches. "China Merchants Bank has three special branches: Beijing, Shanghai, and Shenzhen. In regions such as the Yangtze River Delta, Pearl River Delta, Haixi, Chengdu-Chongqing, and Bohai Rim, there are also some key branches. Currently, the development of these branches still has a considerable gap compared to the three special branches, and there is still corresponding growth space."

Fifth, the application of new technologies. "This may not necessarily be directly reflected in revenue, but it will bring significant promotion to China Merchants Bank in three areas. First, better improve customer experience; second, enhance internal efficiency; third, manage risks more effectively and timely."

Wang Xiaoqing also emphasized that China Merchants Bank must maintain the "calmness" of a commercial bank: being customer-centric, "the more we insist on long-termism, the less we can be short-sighted, and the less we can fleece the sheep"; prioritizing asset quality, "we must never use tomorrow's bad debts to inflate today's revenue"; retail, with a focus on large wealth management, remains the "ballast stone"; and continuously increase investment in technology.

Overall, in response to the question of "what major innovations and changes," Wang Xiaoqing's answer leaned more towards continuity and refinement, rather than a new strategic direction.

Equity investment does not engage in "herd mentality"

Regarding asset growth, Peng Jiawen stated that the average asset growth rate of China Merchants Bank in previous years was around 10%, and now it is about 8%, slightly higher than GDP growth, but compared to peers, the base is relatively low, "so it is basically adaptable." In the future, it will continue to adapt to changes in the external environment, "overall asset growth may slightly decrease from the current growth rate."

Structurally, credit assets are diversifying.

Peng Jiawen stated that in the first quarter of this year, retail credit assets decreased by 1% compared to the end of last year, while corporate assets grew by about 7%; it is expected that the growth rate of corporate assets will still be higher than that of retail, with overall credit growth maintained at around 6%. In terms of investment assets, they currently account for about 32% of total assets and are expected to remain stable at this level; moreover, the growth rate of investment assets is higher than that of credit.

Regarding bond investments, Wang Xiaoqing added that current opportunities come more from volatility. "If the strategies in the previous few years were more about sharing the capital gains brought by declining yields, in the future, our team will invest relatively more in capturing trading opportunities." He mentioned that the decline in yields has allowed China Merchants Bank to accumulate some floating profits in bond investments, "we hold a very cautious attitude towards profit realization. China Merchants Bank will adhere to long-termism in its operations and will not engage in 'eating tomorrow's grain today.'"

Equity investment is a direction that Wang Xiaoqing has elaborated on more and is relatively prioritized for incremental growth.

He introduced that after the establishment of AIC (Asset Investment Company), this year it has planned a budget of over 10 billion yuan for market-oriented debt-to-equity swap project investments, and in the future, it will also focus on equity investment opportunities represented by new productive forces. "In equity investment, we absolutely do not engage in conceptual 'herd mentality,' but rather do thorough cognitive assessments." He emphasized that China Merchants Bank will "base its capital allocation and asset allocation on fundamental premises, starting from capability building."

A market value management team has been established

Since the beginning of this year, the stock price of China Merchants Bank has performed poorly, with a cumulative decline of 11.72%.

In this context, Peng Jiawen stated that the bank has established a market value management team, of which he serves as the leader. The work is divided into three levels: "The first is value creation, primarily focusing on doing well internally; the second is value discovery, which involves better communication with the market; the third is value management, researching tools and methods such as dividends to enhance market value."

Regarding dividends, China Merchants Bank had earlier included "a cash dividend ratio of no less than 30%" in its articles of association, which will be increased to 35% in 2024. When asked whether the dividend ratio could continue to be increased, Peng Jiawen stated that the bank must balance a series of key indicators such as capital adequacy ratio and ROE (return on equity) in its objective management.

Large Models, "Currently, an investment of 20 yuan can generate a return of 100 yuan"

The effectiveness of technological investments was one of the key topics raised during this shareholders' meeting.

Chief Information Officer Zhou Tianhong first clarified the issue of token consumption exceeding budget, represented by Uber, stating that "this was mainly caused by the technology department using large models for coding, rather than the business department using large models for management."

He did not shy away from the limitations of large model programming: extremely high costs; weak software architecture capabilities; and the generation of technical debt, including "spaghetti code" that is difficult to read, as well as performance and security issues. Regarding large model programming, China Merchants Bank's attitude is "actively following up and cautiously applying," with the computing power used for large model programming accounting for only about 5% of total computing power; meanwhile, the token consumption on the business side had reached an average of 33 billion per day by the end of May.

In terms of cost-benefit measurement, Zhou Tianhong introduced that the bank has established a relatively complete system: costs mainly consist of R&D personnel investment and token costs, while benefits have six dimensions. "Currently, the cost-to-income ratio for China Merchants Bank's large model direction, based on our own calculations, is approximately around 20%, meaning that an investment of 20 yuan can generate a return of 100 yuan."

To measure output, he also provided an "AI contribution ratio," which is the ratio of AI-handled business corresponding work hours to actual human input work hours: "At the end of last year, this indicator was 1:13.5, and by the end of May this year, it has improved to nearly 1:9."

On the investment side, Zhou Tianhong stated that China Merchants Bank's total technology investment is about 13 billion yuan per year, and the computing power has begun to take shape, but the proportion used for computing power procurement "is not high, and there is still considerable room to increase AI computing power investment in the future."

Regarding effectiveness and pace, his judgment leans towards the long term. Large language models are a breakthrough of industrial revolution level, but it takes time for technological breakthroughs to lead to changes in industries and society, "it has only been a little over three years since the birth of large model technology." Zhou Tianhong stated that the bank's vision is "very clear"—to build an intelligent bank, "and this process will take time and has a very high level of complexity." (Author｜Cai Pengcheng, Editor｜Liu Yangxue)

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