China Merchants Bank's net profit up 25% to RMB 45.3bn in 2012

Total loans and deposits also rose 16% and 14%.

According to Barclays, CMB pre-announced its 2012 financials on 1 March, its net profit rose 25% y/y to RMB 45.3bn in 2012, which beat its already higher-than-consensus forecast of RMB 43.5bn by 4%.

Here's more from Barclays:

Because of the lack of detail, we cannot see the underlying profit growth drivers, though we suspect the good earnings growth was driven by low expenses and provisions. We had estimated that CMB’s NIM expanded slightly by 2bps q/q to 2.94% in 4Q12.

Fast balance sheet growth: The bank’s total loans and deposits rose 16% and 14% y/y, or 4% and 5% q/q in 4Q12, helping to bring down its LDR by 0.9ppt q/q to 75.2% as of end-2012 from 76.1% at end-3Q12.

Total assets and liabilities both increased by 22% y/y in 2012, indicating 8.4% and 8.6% q/q growth in 4Q12, respectively; we suspect that its balance sheet could be driven by higher growth on interbank assets and liabilities.

Asset quality largely stable: NPLs continued to increase, but at a slower pace of 6% q/q in 4Q12 (vs. +10% q/q in 3Q12), and the NPL ratio also went up slightly, +2bps to 0.61% as of end-2012 (vs. +3bps q/q in 3Q12).

That was compared to Minsheng’s sequentially accelerated NPL increase in 4Q12 (NPL amount +8.5% q/q in 4Q12 vs. +7.6% q/q in 3Q12), which could be attributable to Minsheng’s larger SME loan portfolio, in our view.

Cross-read for other China banks: So far, two H-share banks, Minsheng and CMB, have announced better-than-expected preliminary results for 2012, which we had highlighted before.

While we still see some potential upside to consensus sell-side profit forecasts, we view any earnings season rally as an opportunity to adjust portfolios to a more defensive stance.