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Deutsche Bank Markets Research Asia Industry Date China Chinese banks 25 April 2017 Banking / Finance Banks Industry Update Hans Fan, CFA Jacky Zuo Financial deleveraging impact Series I Research Analyst Research Associate (+852 ) 2203 6353 (+852 ) 2203 6255 – Redemption of entrusted investment hans.fan@ jacky.zuo@ Tighter regulations forced banks to redeem entrusted investment (“Weiwai”) Stephen Andrews, CFA The recent correction of Chinese banks’ share prices was largely driven by Research Analyst escalating financial deleveraging efforts, with the CBRC taking tougher (+852 ) - 2203 6191 initiatives. We expect financial deleveraging to continue. We are launching a stephen-a.andrews@ series of reports to assess the key impacts of financial deleveraging in detail such as funding flows, banks’ capital and asset quality etc. In this first issue we Top picks focus on the redemption of entrusted investment or “Weiwai” in Chinese. Weiwai redemption has led to greater volatility in bond and equity markets and ICBC (1398.HK),HKD4.99 Buy may result in realized investment losses for smaller banks. We remain neutral