Total potential NPLs may not be as bad as market feared; Buy quality banks 3
We see 4%-6% total potential NPL ratio for China banks, not over 10% as some may fear 4
Adjusted book factors in corporate distress; quality banks show attractive risk/reward 10
Bulk of cyclical corporate distress already shown in 12E; could stabilize/ease in 2013E 19
High corporate leverage a long-term risk for China banks; consumer credit critical 23
Fine-tune 2012E NPAT, cut 2013E/2014E NIM/NPAT assuming no fiscal reforms 29
CEB (601818.SS, Sell): Downgrade to Sell on overdue loan surge and capital concerns 33
BONB (002142.SZ, Neutral): Upgrade to Neutral on stable asset quality and profitability 35
Disclosure Appendix 42