CM Bank's Li Li: Balancing Volume, Pricing, and Risk to Guide Moderate Bond Investment

On November 2, a financial frontline update reported that CM BANK (ASX: 03968) held its 2026 third-quarter results briefing today.

In response to an investor question about how to balance asset growth with declining yields against the backdrop of an "asset shortage," Li Li, general manager of the asset-liability management department, said the issue should be considered within the bank's overall large-scale asset-liability strategy.

Li Li explained that on the liability side, China Merchants Bank Co.,Ltd. (ASX: 600036) has seen relatively good growth in liability scale, especially with stable growth in low-cost customer deposits.

On the asset side, overall retail credit demand has slowed over the past two years, with weak growth weighing on total loan growth and causing an overall slowdown. From an asset deployment perspective, this requires greater diversified allocation, with bond investment being one important option.

She said CM BANK achieves comprehensive balance in asset allocation from multiple angles including volume, pricing, and risk. For investment assets such as government bonds and rate bonds, although coupon rates are relatively low, credit risk is also low and they carry tax-exempt advantages, so they still have certain allocation value from the perspective of risk-adjusted return on capital. Against the backdrop of an expected low-interest-rate environment that will persist for a considerable period, appropriately allocating bond investments is necessary.

Li Li said the bank will carry out work in four areas going forward. First, promote steady growth in liability scale and strengthen liability cost control. From the liability side, it will aim to balance volume and quality, drive growth in low-cost liabilities, and manage the total amount well.

Second, improve relative value comparison and coordinated allocation across major asset classes. It will actively promote steady growth in loan assets while, on the basis of balancing credit risk, interest rate risk, and liquidity risk, moderately allocate bond investments and manage the major asset portfolio well.

Third, increase bond trading around market swings and appropriately raise foreign-currency bond allocation. Alongside bond investment, it will further increase band trading and appropriately raise foreign-currency bond allocation by currency, continuously improving the return of the bond portfolio.

Fourth, increase the use of derivative instruments and actively manage interest rate risk. It will further expand the application of derivatives and actively manage interest rate risk under the overall allocation framework.