This report (chinatimes.net.cn) reporter Liu Jia reports from Beijing

On June 25, in the conference room on the fifth floor of China Merchants Bank Tower in Shenzhen's Futian District, a highly anticipated annual shareholder meeting was held.

According to the live transcript obtained by reporters from Huaxia Times, the Q&A session lasted nearly an hour, during which Wang Xiaoqing made his first public appearance as the "proposed president," marking his first systematic explanation of management ideas to the capital market since being appointed as the fifth president of China Merchants Bank at the end of April.

"Today, I am attending the meeting as the proposed president, which is a heavy responsibility and embodies everyone's expectations." Wang Xiaoqing opened by stating, "What I have inherited from President Wang Liang is the achievements accumulated by China Merchants Bank over 39 years, and it is a bank with a fortress-like balance sheet."

This statement sends a clear and critical operational signal to the market. In 2022, Wang Liang was appointed in a time of crisis, implementing the "value banking" strategy amid internal turmoil, leading China Merchants Bank to achieve a smooth transition. Now, the baton has been passed to Wang Xiaoqing, but the timing of the handover is not easy.

The Q1 2026 report shows that China Merchants Bank achieved operating income of 86.94 billion yuan, a year-on-year increase of 3.81%; the net profit attributable to shareholders was 37.852 billion yuan, a year-on-year increase of 1.52%. As of the end of the reporting period, the total assets of China Merchants Bank amounted to 13.48 trillion yuan, an increase of 3.17% compared to the end of the previous year.

In terms of performance in the secondary market, as of the close on June 26, the A-shares of China Merchants Bank closed at 36 yuan per share, with a decline of over 14% year-to-date.

"Four" Determinations and "Five Major" Dynamics

"Today, China Merchants Bank faces many challenges." Wang Xiaoqing admitted that the bank is confronted with a dual overlay of "industry common factors" and "structural factors."

On the common side, Wang Xiaoqing stated that the narrowing interest margin in a low-interest-rate cycle, fee reductions, and rising retail non-performing loans are hurdles that all banks must overcome.

"The real pressure comes from the structural factors within China Merchants Bank itself." Wang Xiaoqing analyzed: first, the high proportion of demand deposits limits the space for reducing liability costs in a low-interest-rate environment, while asset yields will decline in line with the market; second, China Merchants Bank is characterized by retail business, with a high proportion of non-interest income, facing greater phased pressure under the backdrop of fee reductions; third, the high proportion of retail credit assets means that during a period of pressure on retail credit risks, the impact is more direct.

"The structural factors of the industry and China Merchants Bank itself make its cycle slightly different from that of its peers, resulting in slight differences in stock price performance among different banks," Wang Xiaoqing said.

In the face of challenges, Wang Xiaoqing first proposed the "four determinations" of China Merchants Bank: first, to be customer-centric, the more challenges faced, the more one must adhere to long-termism, avoiding short-term gains and not taking advantage of others; second, to prioritize asset quality, not allowing tomorrow's non-performing loans to pile up today's revenue; third, the retail business, which focuses on large wealth management, remains an important characteristic and ballast of China Merchants Bank; Fourth, continue to strengthen investment in technology.

On this basis, he also disclosed the "five" new medium- and long-term growth drivers cultivated by China Merchants Bank. They are: in-depth management of existing customers; consolidating brand and advantages in wealth management; strengthening the specialized operating system; key regional branches "taking the lead" and empowering with new technologies.

In an industry environment where everyone is competing for scale and efficiency, this "4+5" approach by China Merchants Bank, in the view of Gao Chengyuan, director of the Far-reaching Influence Research Institute, will have short-term costs, as revenue growth will be further pressured, and market share may be temporarily eroded by peers expanding their scale. The capital market's tolerance for "no growth" will also be tested; however, the long-term benefit lies in the controllable asset quality, and the stickiness of 227 million retail customers and 3.8 million corporate clients will not be overstretched.

"Once the economy warms up, the low non-performing loan base combined with a high provision coverage ratio will release significant performance elasticity, and the stability of ROE will actually outperform peers. This is a typical strategy of exchanging time for space," Gao Chengyuan analyzed to reporters from the Huaxia Times.

"To excel in every aspect, allowing China Merchants Bank to stand out in the same field." Wang Xiaoqing set the goal for China Merchants Bank: "To operate more resiliently in relatively unfavorable cycles; to operate more flexibly during favorable cycles to reward the trust of customers and investors."

Establish a Market Value Management Team

How to optimize asset allocation and balance returns with long-term stability has become another core topic of this shareholders' meeting. Wang Xiaoqing provided clear answers from the perspectives of bond investment and equity investment.

"In terms of bond investment, China Merchants Bank currently has a proportion of 32%." He stated that the past few years have been a bull market for bonds, and this proportion has allowed for a good share of the profits brought by the bull market. Wang Xiaoqing expects the low interest rate environment to continue for some time, and a bond allocation of around 30% in the bank's major assets is relatively appropriate.

With the shift in strategy, Wang Xiaoqing judges that more opportunities will come from trading opportunities brought by volatility rather than from declining interest rates. China Merchants Bank will invest more in trading opportunities.

Regarding the realization of floating profits, Wang Xiaoqing's attitude is cautious. "We have accumulated some floating profits in bond investments, but we are very cautious about realizing profits. Today's realization actually reduces interest income for the next few years." He emphasized, "China Merchants Bank adheres to long-termism and does not engage in living off future gains."

In terms of equity investment, Wang Xiaoqing stated that China Merchants Bank maintains a high level of attention in this area, which remains a strategic direction. He revealed that AIC (Financial Asset Investment Company) has arranged a budget of over 10 billion yuan this year through debt-to-equity swaps and will further focus on opportunities in the equity investment field represented by new productive forces. He emphasized two prerequisites: first, to follow the principles of major asset allocation. "Commercial banking has two cores: one is asset allocation, and the other is risk management"; second, to set boundaries based on capability. "We do not engage in conceptual matters, but rather in well-informed decisions, actively sharing the development of China's technology sector through long-term capital investment."

"In short, based on capital allocation and asset allocation, starting from professional capability building," Wang Xiaoqing said In addition, regarding the issues of stock price and valuation that investors are most concerned about, Peng Jiawen, Vice President and Chief Financial Officer of China Merchants Bank, stated: "Maintaining continuous growth in stock price is both the wish of shareholders and the goal of the bank."

He revealed that China Merchants Bank has established a market value management team, of which he himself serves as the leader, and regularly holds market value management analysis meetings to convey market and shareholder demands into operational strategies and dividend decisions. Peng Jiawen has divided the market value management work into three levels: value creation, value discovery, and value management.

It is noteworthy that this is one of the few publicly listed banks that have disclosed the establishment of a market value management team.

Jiang Han, a senior researcher at Pangu Think Tank, stated in an interview with the "Huaxia Times" that most banks' investor relations have historically been one-way outputs, while China Merchants Bank, led by its financial officer, has effectively brought the pricing logic of the capital market to the forefront of operational decision-making.

"This mechanism fundamentally changes the transmission path from performance to valuation, creating a two-way feedback loop. By breaking down market value into a three-layer closed loop of value creation, discovery, and management, it means that 'market value' is no longer just a result of fluctuations in the secondary market, but a business anchor point that runs through the entire process of customer exploration and risk bottom line," Jiang Han believes. He thinks this mechanism is expected to truly unblock transmission bottlenecks by translating long-term customer retention into a value language that the capital market can understand, eliminating information asymmetry. At the same time, it changes the previous single logic of only looking at short-term growth rates, providing institutional support for valuation repair.

"The signals released by this shareholders' meeting are reconstructing the pricing logic." Jiang Han further analyzed that the management's candid acknowledgment of pressure stems from structural contradictions brought about by the retail background, and clearly defined the "four stabilizing forces" and "five driving forces," which is equivalent to actively breaking stereotypes and conveying a new paradigm to the market that shifts from "scale expansion" to "in-depth value exploration."