China Merchants Bank's net profit in 2023 increased by 6% year-on-year, while wealth management income declined, leading to negative revenue growth for the full year | Financial Report Insights

Business scale steadily growing, retail financial business remains strong, and China Merchants Bank's revenue in 2023 exceeded expectations.

On the evening of March 25th, China Merchants Bank released its 2023 annual report for the fiscal year ending December 31, 2023. The report shows that in 2023, China Merchants Bank achieved revenue of 339.123 billion yuan, a year-on-year decrease of 1.64%. Among them, net interest income was 214.669 billion yuan, a year-on-year decrease of 1.63%, non-interest net income was 124.454 billion yuan, a year-on-year decrease of 1.65%. Operating profit reached 176.663 billion yuan, a year-on-year increase of 6.79%, net profit attributable to shareholders was 146.602 billion yuan, a year-on-year increase of 6.22%, exceeding the expected 143.74 billion yuan, with a proposed cash dividend of 1.972 yuan per share.

As of the end of 2023, the total assets of the group were 11.028483 trillion yuan, an increase of 8.77% from the end of the previous year; total loans and advances were 6.508865 trillion yuan, an increase of 7.56% from the end of the previous year; total liabilities were 9.942754 trillion yuan, an increase of 8.25% from the end of the previous year; total customer deposits were 8.155438 trillion yuan, an increase of 8.22% from the end of the previous year.

China Merchants Bank President Wang Liang stated:

"In 2023, facing the complex domestic and international operating environment, our management team led all cadres and employees of the bank to conscientiously implement the national macroeconomic policies, regulatory requirements, and the goals and tasks established by the board of directors, adhere to the principle of stability first and seek progress in stability, take the value bank strategic goal as the guide, follow the path of high-quality development, and achieve dynamic balance in 'quality, efficiency, and scale'."

Net Profit Exceeds Expectations, Total Assets Exceed 11 Trillion

Although annual revenue decreased year-on-year, China Merchants Bank achieved a net profit growth of 6% exceeding expectations in 2023, demonstrating strong profitability, stable operational efficiency, and continued internal growth of capital, with total assets surpassing 11 trillion to reach 11.028483 trillion yuan.

Overall asset quality improved, and risk coverage remained robust. The data in the report shows that in 2023, the group's non-performing loan balance was 61.579 billion yuan, an increase of 3.575 billion yuan from the end of the previous year; the non-performing loan ratio was 0.95%, a decrease of 0.01 percentage points from the end of the previous year; the provision coverage ratio was 437.70%, a decrease of 13.09 percentage points from the end of the previous year; and the loan provision ratio was 4.14%, a decrease of 0.18 percentage points from the end of the previous year.

In 2023, China Merchants Bank focused on developing technology finance, green finance, inclusive finance, pension finance, digital finance, and other financial areas, enhancing customer management capabilities, further increasing loan issuance, and steadily advancing the structural adjustment of asset business Next, China Merchants Bank stated that it will continue to consolidate its structural advantages, strengthen heavy capital businesses, expand light capital businesses, ensure a more balanced and stable customer structure, asset structure, regional structure, and income structure, and continuously solidify the foundation for good business performance.

Strong Retail Finance, Decline in Wealth Management Income

As the "king of retail", retail finance is a traditional strength of China Merchants Bank, and its performance in 2023 remains impressive.

In 2023, China Merchants Bank's pre-tax profit from retail finance reached 97.292 billion yuan, a year-on-year increase of 4.95%; the operating income from retail finance was 190.167 billion yuan, a year-on-year increase of 0.89%, accounting for 61.85% of the company's total operating income. Among them, net interest income from retail was 133.766 billion yuan, a year-on-year increase of 3.42%, accounting for 70.34% of retail operating income; non-interest net income from retail was 56.401 billion yuan, a year-on-year decrease of 4.64%, accounting for 29.66% of retail operating income and 56.55% of the company's non-interest net income.

In recent years, China Merchants Bank has been committed to transforming into a "light bank", with wealth management being a major source of non-interest income. By the end of 2023, the bank's asset management business had a total scale of 4.48 trillion yuan and a custodial scale of 21.12 trillion yuan, ranking first in the industry.

However, there has been a decline in income from wealth management business. The report shows that wealth management fee and commission income was 28.466 billion yuan, a decrease of 7.89% year-on-year; asset management fee and commission income was 11.474 billion yuan, a decrease of 7.89%, mainly due to the year-on-year decrease in the average scale of Zhaoyin wealth management products; bank card fee income was 19.525 billion yuan, a decrease of 8.76%, mainly due to the decrease in credit card offline transaction fee income. Settlement and clearing fee income was 15.492 billion yuan, an increase of 2.93%, mainly due to the growth in electronic payment income.

On the client side, the company's retail wealth product holding customers reached 51.3795 million households, an increase of 19.13% from the previous year-end, with private banking customers exceeding 140,000 households; on the service side, the company continued to deepen the "China Merchants Bank TREE asset allocation service system", with the number of customers conducting asset allocation under this system reaching 9.1145 million households, an increase of 12.15% from the previous year-end.

China Merchants Bank stated that it will continue to promote the development of wealth management business in 2024, focusing on expanding the customer base and potential, increasing product innovation, exploring the asset allocation potential of key customers, closely monitoring opportunities in the equity market recovery, optimizing insurance, fund, wealth management, and other product structures, and enhancing the contribution of wealth management fee and commission income through both quantity and price.

In addition, in the private banking business, in 2023, China Merchants Bank recorded 148,842 private banking clients (referring to retail clients with an average daily total RMB assets of 10 million yuan or more in the company), a growth of 10.42% from the previous year-end.

China Merchants Bank stated that in the past year, the company has continuously enhanced the core capabilities of its private banking business, optimized and upgraded its comprehensive service system based on the evolving comprehensive needs of clients in the "people, family, enterprise, and society" segments, steadily advanced, and promoted the high-quality development of the private banking business