China Minsheng Bank's total deposits jumped 13% to RMB 1.4t

But here are some bad news.

According to Barclays Research, China Minsheng Bank's total deposits at end-1H13 amounted to RMB 1.4tn, +13% ytd in 1H13, faster than its peers and system’s deposit growth of 10%, driven by time deposits (+19% in 1H13) and personal deposits (+17.4%), while deposit growth in 2Q13 slowed down to 3.7%.

Here's more:

Total loans recorded stable growth of 7.2% in 1H13 or 3.4% in 2Q13 (vs. +3.7% in 1Q13), mainly driven by MSE loans (RMB 392bn, +23% ytd), retail & wholesale loans (RMB 141bn, +14.2%) and credit card loans (RMB 85bn, +28%). The new MSE loans accounted for 75% of the total new loans in 1H13.

Further NIM contraction by 7bps in 2Q13.

Under our calculation, Minsheng’s NIM further decline to 2.38% in 2Q13, -7bps q/q (vs. -25bps q/q in 1Q13), probably due to the following reasons:

1) Weakening pricing power on MSE loans: In 1H13, average loan yield on personal loans was 7.15%, a decline of 41bps h/h. Since MSE loans accounted for 71% of the personal loans, we believe the bank’s pricing power on MSE loans has been weakening. Loan yield of corporate loans also declined 38bps h/h to 6.98% in 1H13.

2) Accelerating time deposit migration: Total corporate and personal time deposits increased by 15% and 28% ytd to RMB 1,046bn and RMB 366bn in 1H13. Time deposits accounted for around 65% of total deposits at end-June 2013.

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