【出版时间及名称】：DBS:China Banking Sector-long term positive stance intact,2010.8.31
【作者】：DBS
【文件格式】：pdf
【页数】：10
【目录或简介】：
Generally upbeat 1H10.
Of the eight H-share banks’1H10 results, four beat expectations (ICBC, CMB, CNCB,and CMBC), two were in line (CCB and ABC), while twowere slightly below (BOC and BoCom).
Key trends.
NIM in 1H10 was a key positive surprise.
Most banks saw mild NIM improvements from 2H09 dueto liability re-pricing, better loan pricing power and thelast leg of discount bill substitution. CMB was able toaugment its NIM expansion by funding higher yieldingassets with its fresh rights issue capital. We expect banksthat are raising capital later this year to gear up theirasset mix and boost NIM as well. Aside from NIM, creditcosts also came in better than expected. However,operating costs were disappointing as wage pressurereturned in full strength.
Sector outlook.
The sector’s upbeat 1H10 resultsreaffirmed our longer-term positive view. Unfortunately,near term overhangs of capital raising and asset qualityremain. H-share banks are still on track to drain aroundRMB200bn in 2H10 to replenish capital. Meanwhile,fuller disclosures on LGFV classification and provisioningneeds will only come in later this year as banks are stillcomputing data for CBRC’s new guidelines.
Like ICBC, CMB, and CCB.
The sector will likely remainrange bound in 2H10, and we recommend timelyswitches to maximize performance. At this juncture, welike ICBC, which should reverse its laggard performanceafter a stellar 1H10 showing. We also like CCB as thebank is next in line for rights issue. Meanwhile, CMB isour top mid-cap pick for its low exposure to LGFV andoff-balance sheet loans.