China Minsheng Bank Earnings: Asset Quality Remains Challenging Despite Derisking Efforts

China Minsheng Bank's, or CMBC's, first-quarter revenue growth edged up 0.4% year on year, outperforming joint-stock bank peers in our coverage. While fee income growth of 9% year on year outpaced its peers, we note that this reflects a low base and we think CMBC will continue to see challenges in boosting revenue relative to peers. First-quarter revenue growth largely reflects fee income growth masking an 8% year-on-year slide in net interest income. CMBC’s relatively slower loan growth of 3.5% versus system loan growth of 12% and the average 9% pace among its joint-stock bank peers, points to sliding market share. This reflects fierce competition for good-quality loans and anemic retail credit demands during the past quarter as CMBC’s retail loans merely increased 0.1% from end-2022. The bank was more negatively affected by this trend due to its weaker-than-peer customer base, in our view.