【出版时间及名称】：2010年3月中国银业研究报告
        【作者】：野村证券
        【文件格式】：pdf
        【页数】：28
        【目录或简介】：
The platform and what lies beneath
 Cautiously optimistic on asset quality outlook
The share price performance of Chinese banks has been under pressure on the
back of market concerns over the asset quality of loans to GFPs. Our conclusion is
that while we do share investors’ concerns about the potential severity of a worstcase
scenario, we believe the market is slightly over-anxious and, as a result, has
placed too deep a discount on current share prices. We remain cautiously
optimistic on the medium-term outlook for Chinese banks given our view that the
Chinese economy remains robust and will sustain banks’ earnings momentum
going forward.
 Credit-cycle analysis shows history is unlikely to repeat itself
While we are of the view that Chinese banks’ asset quality is highly correlated to
underlying economic cycles, our historical study over the past two decades
suggests that each credit cycle has become shorter and more moderate as
regulators are becoming more experienced in dealing with inflation, as well as
increasing financial flexibility from higher forex reserves. Also, banks now have
much improved corporate governance and their balance sheet strength and
profitability are much stronger than before. Finally, following our case studies on
Hainan Development Bank (involuntarily assuming high cost deposits from other
failed institutions) and GITIC (foreign loan exposure), we believe none of the
Chinese banks under our coverage is currently exposed to the same level of risks.
 Opportunities as market pricing in high possibility of worst case
Our sensitivity analysis indicates that FY11-13F NPAT impact is 11-106% for the
H-share banks under our coverage, assuming a worst-case scenario, which we
believe is highly unlikely to occur following our analysis. We think investors are
continuing to look for reasons (slowing monthly new loans, further capital raising,
lock-up expiry and asset quality issues) to be bearish on Chinese banks, and we
see this short-term pressure presenting good entry points, because sector
valuations look undemanding at <2x FY10F P/BV, <10x FY10F P/E, close to 5%
dividend yield, post-money FY10F ROE of 21% and >20% earnings growth for FY10F.
Contents
Investment summary 3
Chinese banks’ credit cycle becoming shorter, less volatile 5
The 1990s — high volatility mixed with hard tightening measures 5
The 2000s — more stabilised growth amid a more challenging environment 8
The four market concerns on GFPS 10
The root of the problem is local infrastructure demand cannot be met by local
government budget 10
GFPs originally set up to solve this funding gap 10
Short-term and medium-term solutions 13
Perspectives and near-term solutions from three different angles — regulators,
banks and local governments 13
Medium-term solution: Development of bond market and credit rating systems 14
Risk 1: Moral and political hazards — difficult to quantify 15
Risk 2: Balancing between property prices and projects’ ROI 15
Implications for banks — CMB the least exposed among H-share
banks 16
Analysis 1: Infrastructure-related loans — impact on FY11-13F NPAT 11-106% 16
Analysis 2: Loans by geography — FY11-13F NPAT impact 12-40% 17
Case study analysis 18
Case study: Shanghai City Investment (SCI) — an example of efficient running of
GFPs 18
Historical case study: Hainan Development Bank — settling things until they are
settled 19
Historical case study: GITIC — the government is the last guarantor as long as
you are deemed legal 20
Valuation methodology and risks to our calls 21

Investment summary
The recent share-price performance of Chinese banks has been under pressure on
market concerns about the asset quality of loans to government financing platforms
(GFPs), which are firms set up by local governments and act on behalf of local
governments to build infrastructure. These loans have surged alongside the
government’s RMB4tn stimulus package.
In this report, we look at the impact of GFPs from three different perspectives including:
1) the origination of GFPs in China and why they are a concern for investors in
Chinese banks; 2) historical credit cycle analysis and specifically case studies on nonperforming
loans and bankruptcies of financial institutions; and 3) financial impact on
Chinese banks under our coverage assuming a worst-case scenario of loans to
infrastructure and north and west China all becoming NPLs.
Our conclusion is that a worst-case scenario would indeed be severe; we believe the
market is slightly over-anxious and, as a result, has placed too deep a discount on
current share prices.
We remain cautiously optimistic on the medium-term outlook for Chinese banks given
our view that the Chinese economy remains robust to sustain banks’ earnings
momentum going forward. CMB remains our top pick, for its private sector exposure
and being least leveraged to GFP-related loans.
Economics team: public debt-to-GDP still well below OECD average,
even if we add GFP exposure
Our Chinese economics team does not expect the strong loan growth last year to
GFPs to translate into a banking crisis, as they believe that both the central and local
governments have the fiscal capacity to come up with an orderly solution. Additionally,
a “bond-for-loan” programme can be developed such that repayment of the bonds
would be based on central and local governments’ general revenue rather than the
cashflow of individual projects. Finally, according to our Chinese economics team, the
potential RMB12.1tn GFP exposure is about 37% of China’s GDP in 2009, adding this
to China’s public debt-to-GDP ratio of 20% currently would increase the ratio to 57% –
still well below the OECD average of 80%.