GS 高盛：中国银行业 深度报告

（34页） June 6, 2007 06.07

China Banks Lowering sector stance to Neutral

Table of contents
Lowering our sector stance to Neutral on upside inflation/ tightening risks 2
Revising earnings estimates on a macro soft landing scenario 4
Rolling-over to 2008-based price targets 7
Applying ST/LT framework for stock picking: ICBC H, CMB H/A, SPDB 9
Detailed view on each bank 12
Risks: NIM/asset quality-disruptive rate hikes/tightening 19
Disclosures 31
The prices in the body of this report are based on the market close of June 5, 2007.

We believe the Chinese Government may continue to tighten by the end of 2007,
given upside risks for CPI/inflation/GDP, still-negative real deposit rates, and
asset inflation. Measures might include a combination of reserve ratio hike, interest rate
hikes, accelerated Rmb appreciation, and administrative measures.
Typically, bank shares do not perform well in a rate hike and tightening environment, and
we believe China bank shares may be range-bound until concerns on the macro economy
ease.
We also acknowledge the key issue/dilemma faced by PBOC/regulators that real deposits
rates are now negative, which is likely to spur inflation and encourage deposit outflow to
A-share/property markets.
We believe there are two key de facto derating risks for China banks:
1) While this is not our base case (we expect PBOC to replicate the May rate hike move in
its subsequent rate moves), we can not rule out the risk that the PBOC may raise overall