Retail customer assets increased by 12% year-on-year, China Merchants Bank's 2024 annual report "regains the feeling of growth"

On the evening of March 25, China Merchants Bank disclosed its 2024 annual report. As a retail benchmark, the details of the report have attracted significant attention.

The report shows that with strong performance in the last quarter, China Merchants Bank achieved a net profit attributable to shareholders of RMB 148.391 billion for the year, a year-on-year increase of 1.22%.

During the same period, China Merchants Bank launched a cash dividend plan of up to RMB 2 per share, totaling RMB 50.44 billion, with a dividend payout ratio exceeding 35%! Based on the closing price on March 25, 2025, the dividend yield for China Merchants Bank's A-shares reached 4.4%.

These performance metrics indicate that while China Merchants Bank achieved counter-cyclical growth in 2024, it also clearly showed more "tilt" and "attention" towards ordinary shareholders.

Profitability Basically Stable

The latest annual report shows that China Merchants Bank achieved operating income of RMB 337.488 billion in 2024, a year-on-year decrease of 0.48%; and a net profit attributable to the bank's shareholders of RMB 148.391 billion, a year-on-year increase of 1.22%.

As a large bank with total assets exceeding RMB 12 trillion and a major player in retail banking, it is quite challenging for China Merchants Bank to achieve a "correction" in profit growth by the end of 2024.

Specifically, China Merchants Bank achieved net interest income of RMB 211.277 billion last year, a slight year-on-year decline; and non-interest net income of RMB 126.211 billion, a year-on-year increase of 1.41%; non-interest income performed better than interest income.

Additionally, the average return on total assets (ROAA) attributable to the bank's shareholders and the average return on equity (ROAE) attributable to ordinary shareholders were 1.28% and 14.49%, respectively, remaining basically flat or slightly declining year-on-year.

Asset Quality Indicators Show Differentiation

As of the end of the reporting period, China Merchants Bank had total assets of RMB 12.15 trillion, an increase of 10.19% compared to the end of the previous year; total loans and advances amounted to nearly RMB 6.89 trillion, an increase of 5.83% compared to the end of the previous year; total liabilities approached RMB 10.92 trillion, an increase of 9.81% compared to the end of the previous year; and total customer deposits approached RMB 9.1 trillion, an increase of 11.54% compared to the end of the previous year.

As of the end of the reporting period, the non-performing loan balance was RMB 65.610 billion, an increase of RMB 4.031 billion compared to the end of the previous year; the non-performing loan ratio was 0.95%, unchanged from the end of the previous year;

The provision coverage ratio was 411.98%, a decrease of 25.72 percentage points compared to the end of the previous year; the loan provision ratio was 3.92%, a decrease of 0.22 percentage points compared to the end of the previous year.

Net Interest Margin Pressure Mostly Resolved

During the reporting period, China Merchants Bank's net interest income was RMB 211.277 billion, a year-on-year decrease of 1.58%.

During the reporting period, the group's and China Merchants Bank's net interest yield were 1.98% and 2.04%, respectively, down 17 and 16 basis points year-on-year; in the fourth quarter, the group's and China Merchants Bank's net interest yield were 1.94% and 1.98%, down 3 and 5 basis points respectively from the third quarter, with net interest margin-related indicators showing a clear rebound.

The annual report indicates that the main reasons for the decline in net interest margin are:

On the asset side, first, affected by the reduction of existing mortgage rates from the previous year, the decline in the Loan Prime Rate (LPR), and insufficient effective credit demand, the pricing of newly issued loans continues to decline, leading to a continued decrease in the average yield on loans; second, the central market interest rates continue to decline, driving down the yields of market-based assets such as bond investments, interbank lending, and bill discounting.

On the liability side, the growth of low-cost demand deposits is under pressure, and the trend of deposit termization continues, which somewhat weakens the effect of the market-based reduction in deposit rates, maintaining a relatively rigid cost of liabilities.

To maintain a relatively stable net interest margin, during the reporting period, China Merchants Bank strengthened its asset-liability portfolio management. On the asset side, it consistently increased the organization of effective assets, strengthened the management of major asset categories, and maintained a relatively reasonable level of asset yield; on the liability side, it focused on promoting the growth of low-cost core deposits, flexibly arranged the absorption of market-based funds, and continuously optimized the configuration of major liabilities to maintain a cost advantage in liabilities.

In the future, China Merchants Bank plans to continuously optimize its asset-liability structure through forward-looking asset-liability portfolio management, promoting a reasonable and stable operation of net interest margin.

Retail Advantages Expand

A notable highlight in the annual report is the continuous expansion of China Merchants Bank's systematic advantages in the retail financial sector.

As of the end of the reporting period, the total number of retail customers of China Merchants Bank reached 210 million, an increase of 6.60% compared to the end of the previous year; the total assets under management (AUM) of retail customers amounted to 14.93 trillion yuan, an increase of 12.05% compared to the end of the previous year; the balance of retail customer deposits exceeded 3.8 trillion yuan, an increase of 15.43% compared to the end of the previous year; the balance of retail loans approached 3.58 trillion yuan, an increase of 6.06% compared to the end of the previous year. The integration of debit and credit card customer acquisition and operational efficiency continues to improve, with "dual card" customers holding both debit and credit cards accounting for 67.25% of credit card customers at the end of the reporting period, an increase of 1.53 percentage points compared to the end of the previous year.

These indicators are all leading in the industry.

China Merchants Bank actively expands its corporate wealth management business, continuously improves its product system, and optimizes customer experience. As of the end of the reporting period, the average daily balance of corporate wealth management products reached 399.871 billion yuan, a year-on-year increase of 30.35%.

The asset management subsidiaries of China Merchants Bank continuously strengthen their capabilities in investment research, asset organization, risk management, technological support, business innovation, and talent development. As of the end of the reporting period, the total scale of asset management business reached 4.48 trillion yuan. As of the end of the reporting period, the custody scale reached 22.86 trillion yuan, ranking among the top in the industry.

Non-Interest Income Continues to Grow

During the reporting period, China Merchants Bank achieved non-interest net income of 126.211 billion yuan, a year-on-year increase of 1.41%. It accounted for 37.40% of operating income, an increase of 0.70 percentage points year-on-year.

It can be seen that non-interest income is also increasing its impact on China Merchants Bank's revenue.

In terms of specifics, in the fee and commission income, the settlement and clearing fees slightly increased by 0.08% year-on-year, while the wealth management fee and commission income was 22.005 billion yuan, a year-on-year decrease of 22.70% Specifically, among them, the income from agency wealth management was 7.856 billion yuan, a year-on-year increase of 44.84%, mainly driven by the growth in agency sales scale and optimization of product structure; the income from agency insurance was 6.425 billion yuan, a year-on-year decrease of 52.71%, mainly affected by the reduction in fees from the bank insurance channel; the income from agency funds was 4.165 billion yuan, a year-on-year decrease of 19.58%, mainly impacted by the reduction in fund fees and the decline in the scale of equity funds; the income from agency trust plans was 2.125 billion yuan, a year-on-year decrease of 33.72%, mainly due to the decline in the scale of agency trusts; the income from agency securities trading was 1.108 billion yuan, a year-on-year increase of 51.57%, mainly due to the increased demand for securities trading from clients in the Hong Kong capital market.

The growth in non-interest income was mainly attributed to other net income. In 2024, other net income was 54.117 billion yuan, a year-on-year increase of 34.13%.

Among them, the largest proportion was investment income, which was 29.880 billion yuan during the reporting period, a year-on-year increase of 34.74%, mainly due to increased bond investment income.

The largest increase was in fair value change income, which increased by 229.63% year-on-year, mainly due to the increase in fair value of bond investments and non-monetary fund investments.

Dividend yield reached 4.4%

At the same time, China Merchants Bank disclosed the profit distribution plan for 2024.

The plan is based on the total share capital of A-shares and H-shares on the equity registration date for the profit distribution to be implemented at that time, distributing cash dividends to all registered shareholders, with a cash dividend of 2.000 yuan per share (including tax).

In addition, as of December 31, 2024, the total share capital of China Merchants Bank's ordinary shares exceeded 25.2 billion shares, which means a total cash dividend of approximately 50.440 billion yuan (including tax) is planned to be distributed. The cash dividend ratio for the company in 2024 is 35.32% (i.e., the cash dividend accounts for the net profit attributable to the ordinary shareholders of the bank in the consolidated financial statements). This profit distribution plan is subject to approval at the company's 2024 annual general meeting