摩根大通——中国银行业分析 China Banks:Finance Street Newsletter-经管之家官网！

Industry news: 1) Chinese Vice premier Mr. Li Keqiang reiterated theneed to continue property tightening measures given resilient propertyprices in the past few months. All state banks officially denied mediaspeculation that CBRC ordered state-controlled banks to stop real estatedeveloper loans. 2) Banks' disclosed data suggests minimum impactfrom new trust loan regulation given likely amount to be taken back toB/S will only account for nearly 0.7% of total 11E loans and 0.6% of11E RWA. 3) Demand for fiscal deposit increased as some bankscompete for more deposits to maintain L/D within 75%. 4) PBOCsecond payment system was officially launched on Aug 30 to fulfillonline transfer across banks. Company news: 1) Big state-controlled banks ICBC, BOC and ABCposted strong YoY earning growth of 27%, 27% and 40% respectively,and improving asset quality, which either exceeded or matched marketestimates. Banks managements are confident about positive outlook for2H10. 2) SPDB received approval from CSRC for Rmb40bn privateplacement to China Mobile. The bank also reported 34%y/y net profitgrowth over the weekend, largely driven by 10bps NIM expansion q/qand robust fee growth.
Open market operation: Due to lesser bill maturity of Rmb60bn comparedwith Rmb166bn in previous week, OMO in the week of Aug 28 ended upnet liquidity drain of Rmb91bn. Seven-day repo rate edged up by nearly10bps in view of Rmb25bn ICBC convertible bond in next week and otherbond issuance in pipeline. In the short term, market rates would continuetrading in narrow ranges given the concerns on high August CPI, furtherliquidity tightening on property market and large supply of bond issuance.
Share price performance: Chinese banks slightly contracted last week dueto the overall continued weak market sentiment and speculation that CBRCrequested big banks to stop property development lending. H-share bankswere largely down by 1%-3%, except ICBC (+2.3%) and CCB (+0.5%)which ended in positive territory on the back of strong 1H10 earnings, alongwith CMB (+0.6%). ABC and Citic outperformed peers in A share market togain 0.7% w/w each.
Valuation: On average H-share banks are trading at 9.7x 10E earning and1.9x 10E PB. The H-share trading premium to A share has been narrowedslightly to 11% vs. 13% in past weeks. In short-term, we expect strongershare price momentum in ICBC, as well as some medium-sized banks suchas Citic-H. In A-share market, investors may continue to focus on selectedmedium-sized banks like CMB-A, Minsheng-A and SPDB, even thoughbigger state-banks like BoComm-A, ICBC-A and CCB-A are moreattractive in the 12-18 month time frame in our view.