<News Alert> CMB (3968 HK) 1Q22 results in line; Former Chairman Tian under investigation
What’s new
CMB (3968 HK) announced its 1Q22 results in line with market expectation:
- Revenue increased by 8.43% y-o-y to Rmb 92bn. Non-interest income takes up c.40.8% of total revenue.
- Net profit increased by 12.5% to Rmb 36bn. The growth is in line with consensus expectation of c.12.5% y-o-y growth for FY22.
- NIM dropped by 1bp y-o-y or up by 3bps q-o-q to 2.51%.
- NPL dropped by 8bps y-o-y or increased by 3bps q-o-q to 0.94%. NPL ratio to property sector was up by 1.18ppt compared with FY21 to 2.57%. Coverage ratio dropped by 21.19ppt q-o-q to 462.68%.
- 1Q21 ROE was 19.24%, or 30bps y-o-y drop.
Meanwhile, Based on the information disclosed on 22 April 2022, Tian Huiyu, the former Secretary to the Party Committee and the former President of the Company, is currently under the disciplinary review and investigation by the Central Commission for Discipline Inspection and the National Supervisory Commission (????????),for suspected serious violations of discipline and law.
Our view
- Earnings and revenue growth was on track in 1Q22. CMB managed to stabilize its NIM despite of the interest rate downward pressure in China.
- Asset quality is overall stable, with a more than 400% coverage ratio. The NPL ratio in corporate loan in almost all the sectors except property sector is showing a downward trend and that for retail loan is stable. We have to watch closely on property sector related risk.
- The negative news regarding to CMB’s former chairman Tian should be expected and priced in to a large extent already. At this moment, we don’t see material impact on its long-term strategy and fundamentals, but we do expect short-term volatilities in share price.
- We currently have BUY with TP of HK$ 79 on the counter.