What happened: On 18 April, China Merchants Bank (CMB, or the "Company") announced the removal of Mr.
Tian Huiyu's duty as the President and the Director of CMB, subject to further assignment.
Comments and views: The sudden resignation of Mr. Tian Huiyu as the President of CMB may cause the market to worry in terms of the Company's overall management ability, business direction, business development strategy and the Company's executive ability in the future, and further trigger market worries about performance and development prospects of CMB. As the largest joint-stock commercial bank in mainland China, CMB has a good management structure and high standard of corporate governance. We think that the company's operation and performance will not be greatly changed by the change of senior executive positions. Therefore, we do not think that this incident will have a material impact on the Company. CMB's retail finance business and wholesale finance business both recorded good growth in 2021. In 2021, the profit before tax from the retail finance business of the Company amounted to RMB76.949 bn, up 21.07% YoY; and the Company achieved profit before tax from wholesale finance of RMB61.354 bn, up 20.85% YoY. In 2022, we expect the Company's interest-earning assets to still grow at a relatively good pace and the Company's NIM to remain relatively stable. We expect the Company's net fee and commission income to still record relatively good growth. We project the Company's asset quality to remain relatively stable, and improve somewhat, and the Company's impairment losses will grow at a relatively slow pace. We expect the Company's earnings to still grow at a relatively fast pace in 2022.
Investment suggestion: We expect EPS for FY22/ FY23/ FY24 to grow YoY by 13.9%/ 15.1%/ 14.4% to RMB5.253/ RMB6.044/ RMB6.913, respectively. We maintain our "Buy" rating and TP of HK$83.36 for the Company.