Profit recovery prevails over
near-term credit risk 3
NPLs not a near-term factor 3
Profit recovery centred on NIM recovery 5
No reason to differentiate in the near term… 6
…structural and profit recovery themes for the longer term 7
Risks 8
Corporate risk…steady 11
Risk 1: poor repayment ability? 12
Risk 2: The invisible hand? 21
Risk 3: Speculative use of bank loans? 23
Another ‘bailout’? 25
What if it went terribly wrong? 25
1) The bailout scenario 25
2) Banks take the pain 27
Less volume; more mix 29
Loan volume driver ends 29
Discounted bills roll-over continues into 2010e 29
Banks continue to “cash in” on 1H09 loan growth 31
Asset yield recovery 32
Loan outlook - volume vs yield 32
Other asset yields - investment yields to go up 35
Don’t forget the liabilities 39
Liabilities bring upside in 2H09 39
What if we are wrong? 42
Company profiles 43
Bank of China (3988) 45
Bank of Communications (3328) 51
China Construction Bank (939) 57
China CITIC Bank (998) 63
China Merchants Bank (3968) 69
Industrial and Commercial Bank of China (1398) 77
Appendices 81
Disclosure appendix 96
Disclaimer 99