JPMorgan Chase released a research report stating that China Merchants Bank's (03968) net profit for the fourth quarter of last year increased by 3% year-on-year, surpassing JPMorgan's forecast by 2 percentage points and significantly exceeding market expectations by 7 percentage points; operating revenue rose 2% year-on-year. However, the bank's non-performing loan (NPL) coverage ratio decreased by 14 percentage points quarter-on-quarter to 392%, while the NPL ratio remained stable at 0.94%. The institution expects the market to react positively to CM BANK's higher profit growth in the fourth quarter, reiterating an "Overweight" rating with a target price of HK$61, and continues to list the stock as one of its top sector picks. JPMorgan believes that the bank's increased recognition and write-offs of bad debts in the previous quarter led to stable NPLs, but resulted in a decline in provisions. The firm believes the drop in provisions is unlikely to trigger substantial market concerns about CM BANK's future profitability, as it boasts the highest NPL coverage ratio among Chinese commercial and state-owned banks, and investors anticipate an earnings recovery by 2026 alongside stable asset quality.