China Merchants Bank Co., Ltd. :CIHKY-US: Earnings Analysis: Q4, 2016 By the Numbers : March 29, 2017

China Merchants Bank Co., Ltd. reports financial results for the quarter ended December 31, 2016.

We analyze the earnings along side the following peers of China Merchants Bank Co., Ltd. – China Citic Bank Corporation Limited Unsponsored ADR Class H (CHCJY-US) that have also reported for this period.

Highlights

  • Year-on-year change in operating cash flow of 2.62% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings grew despite decline in operating margins and pre-tax margins compared to same period last year.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2016-12-31 2016-09-30 2016-06-30 2016-03-31 2015-12-31
Relevant Numbers (Quarterly)
Revenues (mil) 7388.91 N/A 8644.96 9276.93 7208.17
Revenue Growth (%YOY) 2.51 N/A -0.86 11.29 5.41
Earnings (mil) 1447.12 2536.31 2569.29 2809.75 1436.32
Earnings Growth (%YOY) 0.75 3.15 1.11 1.81 -12.55
Net Margin (%) 19.59 N/A 29.72 30.29 19.93
EPS 0.28 0.5 0.51 0.56 0.28
Return on Equity (%) 9.84 17.39 17.74 19.64 10.37
Return on Assets (%) 0.69 1.22 1.23 1.34 0.69

Access our Ratings and Scores for China Merchants Bank Co., Ltd.

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

CIHKY-US‘s change in operating cash flow of 2.62% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

Despite a decline in operating’s margins as well as a decline in pretax margins, the company’s earnings rose.

EBIT Margin History
PreTax Margin History
EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables

Access our Ratings and Scores for China Merchants Bank Co., Ltd.

Company Profile

China Merchants Bank Co., Ltd. engages in the provision of corporate and personal banking services. It also conducts treasury business and provides asset management and other financial services. It focuses on individual and corporate businesses, credit card, wealth management, and financial transactions, The individual business includes personal loan; savings; home life such as online exchange and payment, safety box, and self-service payment; and investment banking. The corporate business includes cash management; investment bank; pension finance; domestic, international, and offshore business; finance lease; financial industry; and asset custody. The company was founded on March 31, 1987 and is headquartered in Shenzhen, China.

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