德意志银行-金融-financial deleveraging impact series 4 when to end what to track-20170626-deutschebank.pdfVIP

Deutsche Bank Markets Research Asia Industry Date China Chinese banks 26 June 2017 Banking / Finance Banks Industry Update Hans Fan, CFA Jacky Zuo Financial deleveraging impact Series 4 Research Analyst Research Associate (+852 ) 2203 6353 (+852 ) 2203 6255 – When to end? What to track? hans.fan@ jacky.zuo@ Financial deleveraging only halfway through, may continue to 4Q17 or beyond Stephen Andrews, CFA Financial deleveraging has made progress: banking asset growth has softened; Research Analyst shadow banking and WMP have decreased; and the credit-to-deposit ratio has (+852 ) - 2203 6191 started to moderate. However, we do not think the process is close to the end, stephen-a.andrews@ as the government has not fully achieved its deleveraging goal or reached its tolerance level. We expect tightening to continue till 4Q17 or beyond, keeping Top picks market rates elevated. While this helps lower systemic risks, the likely near- term impact is slower credit growth, higher shadow banking credit risk and ICBC (1398.HK),HKD5.25 Buy earnings/capital pressure for smaller banks. Thus, we stay neutral on the sector