Earnings call transcript: China Merchants Bank posts mixed H1 2026 results

China Merchants Bank disclosed its first-half 2026 financial results, revealing a mixed outcome. Earnings per share (EPS) came in at $1.52, falling short of analyst expectations of $1.55 by 1.9%. Nevertheless, revenue surpassed forecasts with $87.68 billion, outperforming the $86.34 billion estimate by 1.6%. The stock reacted positively to the news, jumping 3.02% in after-hours trading to reach $50.50 per share.

The bank's strong performance was primarily driven by robust revenue growth of 1.6% and impressive wealth management fee income, which increased by 18.44% year on year to reach CNY 24.7 billion, marking its highest level in five years. Profit attributable to shareholders grew modestly by 2.02% to CNY 76.45 billion. The bank's asset quality remained stable, with the non-performing loan ratio staying unchanged at 0.94%.

Management highlighted that the most challenging phase of net interest margin pressure may have already subsided. The bank has been actively investing in AI, digital tools, and cross-border finance. They reported a net operating income of CNY 178.135 billion, up 4.83% year on year, and net profit attributable to shareholders of CNY 76.45 billion, up 2.02% year on year. The cost-to-income ratio improved to 29.7%, down 0.41 percentage points from the previous year.

In a challenging market environment characterized by weak credit demand, low interest rates, and pressure on net interest margins, China Merchants Bank demonstrated resilience. Its net interest income grew by 5.6% to CNY 112.02 billion, while net fee and commission income increased by 5.99% to CNY 39.86 billion. Total assets rose 5.47% to CNY 13.71 trillion, and total customer deposits surpassed CNY 10 trillion, growing by 3.32% year on year.

The bank's performance remains highly profitable by industry standards, with a return on average assets of 1.14% and return on average equity around 13%. InvestingPro data highlights the bank's consistent profitability and consistent dividend payments for 24 consecutive years. Despite the modest EPS miss, the revenue beat and stable credit profile appear to have left investors with a generally positive view of the bank's performance.