China Merchants Bank 3968

[winston]

Another Chinese bank reporting good results. Should be good for the HK & SH markets on Monday.

BTW, I've used all the banks in China and China Merchant Banks has the best retail service. Thereafter, I bought some of their shares. No longer vested now.

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China Merchants Bank sees H1 net more than double
Fri Jul 4, 2008 4:32pm IST

HONG KONG, July 4 (Reuters) - China Merchants Bank (3968.HK: Quote, Profile, Research) 6013968.SS estimated on Friday that first-half net profit more than doubled, a day after bigger rival Industrial and Commercial Bank of China (1398.HK: Quote, Profile, Research) estimated its earnings had jumped by more than half in the first six months.

Merchants Bank, the country's No. 6 lender, cited growth in both loans and non-loans services income for the boom in net profit. It posted 6.12 billion yuan ($892.1 million) in net profit in the first half of 2007, under Chinese accounting standards.

Analysts say China's lenders posted enormous bottom-line growth in the first half this year as the economy galloped ahead, but face a challenging second half as the property market deflates and the economy slows.

[winston]

Not vested. From Dr. Check:-

Mainland banking is one sector that might outperform the market. Even in the current economic climate there are better profit forecasts from this sector.

The sixth-largest lender, China Merchants Bank (3968), is my favourite. It estimates its net profit for the first-half to June to be up more than 100 percent year- on-year compared with 6.12 billion yuan (HK$7 billion) in the first half of 2007.

The strong performance was due to an increase in loans and interest spread as well as growth in interest and non-interest income. It also gained from the issuance of more than 20 million credit cards by the end of last year, accounting for about one-third of the mainland's domestic market.

Its HK$36.6 billion acquisition of Wing Lung Bank (0096) could create positive synergies.

Macquarie expects CMB to maintain its second quarter net interest margin at a similar level to that achieved in the first three months - around 3.64 percent - and forecasts 2008 net profit of 23 billion yuan, up 51 percent year-on year with a target price of HK$31.47. CMB closed at HK$26.20 yesterday. Dr Check suggests buying this stock at below HK$26.

[winston]

Not vested.

China Merchants Bank H1 profit up 116 percent
By Kennix Chim

HONG KONG, Aug 19 (Reuters) - China Merchants Bank (3968.HK: Quote, Profile, Research, Stock Buzz), China's sixth-largest lender, said first-half earnings more than doubled in 2008, topping forecasts due to strong non-interest income growth and reduced credit costs.

Although China Merchants Bank has no U.S. subprime-related holdings, it faces challenges at home as small and mid-sized businesses in the Pearl River Delta region are hit by rising costs and property prices in Shenzhen drop, raising concerns about asset quality.

The lender agreed in June to buy a controlling stake in Hong Kong's Wing Lung Bank (0096.HK: Quote, Profile, Research, Stock Buzz) in a $4.66 billion deal, and plans to issue 30 billion yuan ($4.37 billion) of subordinated bonds to support its capital base after the acquisition.

China Merchants Bank (600036.SS: Quote, Profile, Research, Stock Buzz), the country's biggest non-state lender, posted 13.25 billion yuan net profit ($1.9 billion) in the first half of 2008, compared with 6.12 billion yuan in the same period in 2007.

A poll by Reuters of five analysts found an average forecast for first half net profit of 12.4 billion yuan.

The bank's net interest income derived from lending operations jumped 64 percent to 24 billion yuan in the first half of 2008, due to average yield of both corporate loans and retail loans increased as China raise interest rate since the second half of 2007.

Net interest margins widened to 3.66 percent at the end of June compared with 3.11 percent at the end of December, due to stronger pricing power for banks as loan quota became scarce due to Beijing's curbs on lending growth.

Net fee and commission income jumped 53.7 percent to 4.1 billion yuan in the first half of 2008, which accounted for 14 percent of operating net income, lifted by strong bank card fees, agency services fees and commissions from trust.

At the end of June, total outstanding loans amounted to 742.7 billion yuan, an increase of 10 percent from the end of 2007.

The bank's ratio of non-performing loans against total lending dropped to 1.25 percent at the end of June, from 1.54 percent to the end of last year.

Merchants Bank said small and medium sized enterprises loans accounted for 40.6 percent of total enterprises loans at end of June, with the non-performing loan ratio was 3 percent, a slight decrease compared with beginning of this year.

Merchants Bank's Shanghai-listed shares have fallen more than 46 percent so far this year, while its Hong Kong-listed shares were down more than 23 percent, compared with a 24.7 percent drop in the benchmark Hang Seng Index .HSI.

The Hong Kong-listed shares ended down 0.4 percent on Monday, compared with a 1.1 percent loss in the broader index.

[winston]

Not vested.

Merchants Bank sees net interest margin narrowing
Katherine Ng

Net interest margin will decline in the second half amid a shift of capital from the stock market to fixed deposits and uncertain rate policies, China Merchants Bank (3968) has said.

"If the market remains gloomy, there will be more capital inflow to fixed deposits and the issuance of a 3 billion yuan [HK$3.41 billion] bond will lift capital costs," chief financial officer Li Hao said yesterday.

The Shenzhen lender on Monday said net interest spread widened during the first half to 3.66 percent, from 3.11 percent at the end of last year.

Despite loan growth slowing to 10 percent, the higher NIM helped net interest income to grow 64 percent.

Chairman Qin Xiao said the bank will compensate for declining NIM and slowing loan growth in the second half by diversifying into non-fee income business, and increased lending to small and medium-sized businesses.

He said the lender will keep annual asset growth at 20 percent and loan growth rate at no more than 20 percent.

President Ma Weihua said he hopes the acquisition of Wing Lung Bank (0096) can be completed by September. In June, Merchants Bank agreed to buy a 53.1 percent stake in Wing Lung for HK$19.3 billion.

Merchants Bank posted a 116 percent jump in first-half earnings to 13.25 billion yuan on the back of its higher interest rate spread and robust fee income growth.

[winston]

They have the best Customer Service for the Retail segment.

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DJ MARKET TALK: CMB Off 1.0% Pre-Open;A-Shr Lockup Period Expires

0955 [Dow Jones] China Merchants Bank (3968.HK) down 1.0% at HK$11.38 at pre-open, extending Friday's 1.5% fall, amid concern total of 4.8 billion A-shares, or 40% of bank's total share base (A-shares and H-shares) has become tradable after lockup period expires today.

A-shares (600036.SH) stabilizing, down 0.4% at CNY14.21, after ending down 4.4% Thursday (A-shares suspended Friday due to a shareholder meeting). Conita Hung at Delta says this wouldn't affect H-shares directly, while overhang has removed, as its A-shares steady.

Analysts in China tip selling pressure in CMB A-shares small after lockup period, as those shares mainly held by parent China Merchants Group and other cash-rich state-owned firms, such as China Cosco Group

[winston]

They have the best Customer Service amongst the Chinese Banks..

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DJ China Merchants Group To Raise Stake In Merchants Bank-Report

SHANGHAI (Dow Jones)--State-run conglomerate China Merchants Group will continue to increase its stake in China Merchants Bank Co. (3968.HK), the China Securities Journal reported Wednesday, citing Qin Xiao, chairman of both the group and bank.

Merchants Group increased its holding in the bank late February, the report quoted Qin as saying. Qin didn't say how many Merchants Bank shares the group bought on the stock market, but he said Merchants Group won't reduce its holding in the bank even though a lockup period on its stake expired Monday, the report said.

China Merchants Group owned a 14.51% stake in Merchants Bank before the lockup expiry. --------------------------------------

[winston]

DJ MARKET TALK: CS Tips China Merchants Bank FY08 Net Profit +42%

1535 [Dow Jones] STOCK CALL: Credit Suisse expects China Merchants Bank (3968.HK) to report FY08 net profit +42% on-year at CNY21.6 billion, but tips 4Q08 net profit fell 52% on-quarter. Cuts 2008-09 estimates by 9%, 7% to reflect higher impairment charge for loans in 4Q08, greater margin pressure in FY09 due to intensifying pricing competition, particularly in residential mortgages.

Says key earnings risk near-term from management's recent confirmation of impairment charges on goodwill from Wing Lung Bank acquisition; estimates at CNY18.8 billion. Adds, CMB likely to see sharpest margin compression pressure among China banks as mortgage pricing competition intensifies, discounted bills' yield slides rapidly. Cuts target price to HK$10.73 from HK$11.55, based on 8x 2009E P/E; rates at Neutral. Shares up 3.1% at HK$13.36

[winston]

DJ MARKET TALK: CMB Off 7.0%; Citi Ups Target But Keeps Sell Call

1143 [Dow Jones] China Merchants Bank (3968.HK) down 7.0% at HK$14.34 on sharp profit-taking; 10-day moving average at HK$14.31 may not offer much support, volume heavy at HK$306.3 million. Citigroup raises CMB target price to HK$11.50 from HK$10.00 as raises FY09 earnings forecast by 10% mainly on lower credit cost assumption; still, keeps stock at Sell. Expects 4Q08, 1Q09 results likely both weak, due to sharply falling NIM, poor loan mix; NIM contraction will likely be most severe in 4Q08, with further sequential decline in 1Q09.

Adds, while headline loan growth in 1Q09 will be strong, vast majority of new lending will likely be in low-yielding discounted bills

[winston]

Merchants Bank 2008 Net Rises 38% to 21 Billion Yuan (Update1) By Theresa Tang

April 9 (Bloomberg) -- China Merchants Bank Co., the nation’s fifth-largest bank by market value, said profit increased 38 percent in 2008 from a year earlier.

Net income jumped to 21.08 billion yuan ($3.1 billion), or 1.43 yuan per share, from 15.24 billion yuan, or 1.04 yuan, in 2007, the bank said in a filing of preliminary financial data to the Hong Kong stock exchange today, citing Chinese accounting standards. The bank said the numbers weren’t audited.

President Ma Weihua said earlier today that the bank is taking advantage of the government’s $585 billion stimulus package to bolster infrastructure lending.

“The bank can benefit from the stimulus package by offering more medium- to long-term loans,” Ma said in an interview at the lender’s headquarters in Shenzhen, southern China, where the company was founded 22 years ago yesterday. “It can help improve the asset quality on our loan book.”

Lending by Chinese banks soared this year as the government directed them to help finance construction of roads, railways and bridges, countering the effects of a plunge in exports. Extending credit to state-backed projects offers a way for banks to increase revenue while limiting the risk of more bad loans.

“Ma is sending a positive message,” Liu Jun, a Wuhan- based analyst at Changjiang Securities Co., said before the earnings. “Merchants Bank traditionally has more loans to retail customers, but those loans are dropping.”

New bank loans reached a record 1.87 trillion yuan in March, Market News International reported yesterday, citing people it didn’t identify. That would take the total for the first quarter to 4.56 trillion yuan, just shy of the government’s full-year target for new lending, Market News said.

While the credit boom has fueled optimism about a speedier economic recovery, it has also fed concerns that bad loans will pile up, weakening lenders. Loan defaults are the biggest threat to Chinese banks, Fitch Ratings said in January.

China Merchants Bank advanced 0.3 percent to HK$14.46 in Hong Kong, before the earnings. It dropped 6.5 percent yesterday after Citigroup Inc. kept a “sell” rating on the stock and said the bank may have to raise capital.

[winston]

DJ MARKET TALK: China Merchants Bank +4.1%; Goldman Stays Neutral

1048 [Dow Jones] China Merchants Bank (3968.HK) +4.1% at HK$15.06, but mostly in-line with gains in other mid-tier Chinese banks with Bank of Communications (3328.HK) +4.4%, after CMB tips FY08 net profit to rise 38% to CNY21.08 billion. Goldman Sachs says bottom-line, revenue both in line with forecasts, but pre-DPS BVPS of CNY5.41 is 7% lower or about CNY6.1 billion short of book value forecast; believes BVPS shortfall mainly due to impairment charges against equity for CNY10.3 billion goodwill related to CMB buying 47% of Wing Lung Bank it didn't already own.

Keeps Neutral call on premium valuation vs peers, lower tier-one CAR vs peers, also CMB's FY09 NIM performance vs FY08 could be substantially weaker than bigger banks given potentially more severe shift to time deposits from high demand deposits base, high proportion of bill discount loans, low NIM of Wing Lung Bank operations in HK. Volume modest at HK$169.1 million; year-to-date high of HK$17.36 distant.