Banks 

China 
Special Report 
Analysts  Summary
Charlene Chu
+8610 8567 9898 x 112
charlene.chu@fitchratings.com
Chunling Wen
+8610 8567 9898 x 105
chunling.wen@fitchratings.com  participants. Could banks in China be stronger than they are being given credit for?
Related Research
· Bank Systemic Risk Report (November 2009)
· Chinese Banks: Soaring Credit Amid Weak
Corporate Climate a Concern (May 2009)
· Asset Quality Under Pressure As Credit
Cycle Turns (January 2009)
· Chinese Banks: Signs of Strain Emerging,
Despite Strong H108 (September 2008)
Chinese Banks – Annual Review
and Outlook 
 
As Western banks continue to wrestle with the events of the past year, Chinese
banks have emerged from the global crisis relatively unscathed, and now stand
among the largest financial institutions in the world. The resilience of Chinese
banks has attracted a growing amount of attention and inquiry from market
With lending expected to rise by close to 30% of GDP by year‐end (2008: 16.7%) and
loan spreads down 160bp from mid‐2008, many analysts have been worried about a
deterioration in Chinese banks’ performance. However, earnings and asset quality
have generally surprised on the upside in 2009. Consequently, most measures of
capitalization, although clearly weaker than at end‐2008, have demonstrated less
erosion than expected given the magnitude of growth.
While recent performance has been better than anticipated, Fitch Ratings continues
to believe that a high degree of caution is still warranted due to major ongoing
weaknesses in loan classification and disclosure of off‐balance‐sheet exposures,
Chinese banks’ lack of experience operating through a full economic cycle, and the
lengthy process of instilling a new credit culture. Meanwhile, although this year’s
fiscal and monetary stimulus appear to be succeeding in reviving the economy, the
aggressive growth of credit in H109 has raised the spectre of a medium‐term bad
loan crisis, although this by no means is a foregone conclusion.
Other recent developments provide additional cause for concern; chief among these
is the growing amount of unreported loan transactions, which are increasingly
distorting credit growth figures at an institutional and systemic level and represent
a growing pool of hidden credit risk.
Reflecting Fitch’s long‐standing caution in China, many of these concerns are
already built into the Individual Ratings of Chinese banks, which continue to hover
at the lower end of the scale from ‘A’ (high) to ‘F’ (low, see Table 1). However,

Table 1: Fitch’s Ratings of Chinese Banks (at End‐November 2009)

Bank LT IDR Individual Support
China Merchants Bank (Merchants) C/D 2
China CITIC Bank (CITIC) C/D 2
Bank of Beijing (BoB) D 3
Bank of China (BOC) A D 1
Bank of Communications (BCOM) A‐ D 1
Bank of Shanghai (BoSH) BB‐ D 3
China Construction Bank (CCB) A D 1
China Minsheng Banking Corporation (Minsheng) D 3
Industrial & Commercial Bank of China (ICBC) A D 1
Industrial Bank Co.Ltd. (IND) D 3
Shanghai Pudong Development Bank (SPDB) D 3
China Everbright Bank (CEB) D/E 2
Guangdong Development Bank (GDB) D/E 3
Hua Xia Bank (HXB) D/E 3
Shenzhen Development Bank (SZDB) D/E 3
Agricultural Bank of China (ABC) E 1
Agricultural Development Bank of Chinaa (ADBC) A+ n.a. 1
China Development Banka (CDB) A+ n.a. 1
Export‐Import Bank of Chinaa (ExIm) A+ n.a. 1
a
Fitch does not assign Individual Ratings to policy banks, as they do not operate on a fully standalone basis
Source: Fitch 

www.fitchratings.com  17 December 2009 

 Banks
Chart 1: CNY Loan Growth downward revisions are possible for some institutions in 2010‐2011 if the growing
divergence between credit risk and capitalization materially worsens. In contrast,
New loans/mo. (3mma, LHS)
CNY loans (yoy, RHS)
the Outlooks for the Long‐Term IDRs of China’s major banks are Stable, as the
(CNYbn) (%)
ratings are underpinned by strong expectations of state support in the event of
1,600 40 stress. This report discusses recent trends in China’s banking system and highlights
1,200
the key challenges heading into 2010, including managing brisk loan growth amid
30 increasingly thin capitalization, rising hidden credit exposure, and the growing
800
amount of credit and liquidity risk in interbank and investment securities portfolios. 
20
400

0 10
Credit Growth 
2001
2002
2003
2004
2005
2006
2007
2008
2009

Without question, the dominant theme in 2009 has been the unprecedented level of
credit growth, which has surpassed all forecasts published at the start of the year.
Source: Bloomberg, PBOC
Fitch expects total combined CNY and foreign currency loan growth of 32%, or
USD1.5trn, for 2009, with the total loans/GDP ratio rising to 127% from 106% at
end‐2008 (see Chart 1). This is a tremendous amount of money to enter an
emerging‐market economy in the span of one year, particularly given that over
three‐quarters of it was concentrated in just the first six months. Credit growth of
this magnitude inevitably places a strain on banks’ internal risk management, and
raises concerns about a future deterioration in loan quality.
In other countries, past episodes of banking system distress have often been
preceded by periods of very rapid credit growth in excess of nominal GDP growth.
In its semi‐annual “Bank Systemic Risk Report” (see Related Research on front
page), Fitch’s sovereign team evaluates trends in credit growth, asset prices, and
real effective exchange rates for 86 countries under coverage, and assigns a Macro‐
Prudential Indicator (MPI) score ranging from ‘1’ (low risk) to ‘3’ (high risk). China’s
MPI has been ‘1’ since the launch of the report in July 2005, but this could be
revised upward in 2010 given this year’s acceleration in lending.
Looking into next year, loan growth will be less brisk than in 2009 as the pressure
for economic stimulus eases and balance sheet constraints from weakened capital
and loan/deposit ratios become more binding. Fitch’s baseline estimate is net new
loans of CNY8trn or more, or 20%+ growth yoy. A key factor to monitor will be the
trend in outright sales of loans and/or re‐packaging of loans into wealth
management products, which are growing in popularity but are largely unreported.
These transactions, which free up space to extend new loans and lessen the
pressure on capital and liquidity, can lead to a noticeable reduction in a bank’s
outstanding loans and result in understated credit growth figures at an institutional
and systemic level. Fitch suspects this activity was one factor behind the marked
slowdown in aggregate loan growth figures in H209, which may not have moderated
as much as official figures suggest.
No comprehensive data is available on the nominal amount of this activity, but
there is evidence that loan re‐packaging transactions picked up in H209 (see
Chart 2; no concrete data is available on outright loan sales). Although Chinese

Chart 2: No. of Loan‐Related Wealth Management Products Issued

Loan‐only products Products with loans as a core component
1,250

1,000

750

500

250

0
Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Oct‐Nov
09

Source: Wind, Fitch

Chinese Banks – Annual Review and Outlook

December 2009  2 
 Banks
banks argue that they face little to no exposure to losses on these
Chart 3: New Loans Share
End‐2008 to Q309
transactions, Fitch believes that banks could still be reputationally liable for some
portion of losses, placing a larger portion of capital at risk than would appear on
City commercial Rural banks the surface (see the section Key Themes in 2010 on page 11).
banks 2%
8% Who Lent the Most?
Policy State‐owned and joint‐stock banks (JSCBs) have accounted for the majority of new
banks, coops Big 5 credit this year, extending 74% of all new loans from January to September 2009
16% 54% (see Chart 3). This reflects these institutions’ closer relationships with state
JSCBs enterprises and the infrastructure‐heavy nature of a large portion of this year’s
20% lending. State‐owned banks’ contribution is broadly consistent with their overall
Source: PBOC market share, while JSCBs’ 20% share of new loans is 6pp above their share of
system assets. More aggressive growth at JSCBs in part reflects the intense level of
competition and ceaseless drive to gain or maintain market share between these
institutions, which often trumps considerations of safety and soundness.
A unique feature of the growth in H109 was the large share of short‐term loans, in
particular discounted bills, which made up 23% of new lending in H109 (this share
fell to 10% by Q309 owing to numerous maturities). Historically, the popularity of
these instruments rises whenever competition between banks intensifies, as they
are the only instruments Chinese banks can use to compete on price (for additional
information, see “Chinese Banks: Soaring Credit Amid Weak Corporate Climate a
Concern” under Related Research on front page).
Chart 4: Asian Leverage Although bills have been contracting rapidly in H209, it is worth spending some time
Gross loans/tangible equityª to discuss these exposures, as there seems to be some confusion as to who is
HK India Korea carrying what type of credit risk from these instruments. A discounted bill in China
(x) Taiwan China is money advanced by a bank to a corporate borrower that submits a valid
13 acceptance from another bank (or sometimes the same bank). When the bank
11 extends the money to the borrower, it is actually taking on exposure to the bank
9 that issued the acceptance, ie interbank exposure, while the final exposure to the
7 corporate entity resides with the bank that issued the acceptance.
5
In this context, the most accurate measure of who took on the most non‐bank
2007 2008 H109
ª Average of top 10 banks credit exposure in H109 is not gross loans, but gross loans less discounted bills plus
Source: Bank financial statements; Fitch acceptances. By this measure, China Minsheng Banking Corp. and China Merchants
Bank posted the fastest growth in H109 of 48% and 42% un‐annualized (see Table 2).

Table 2: Breakdown of H109 Credit Exposure

Gross loans Gross loans – discounted bills + acceptances
Loans – bills + acceptances/
H109 H109 tangible equity
increase Growth Loans/ tangible increase Growth Change from
Bank (CNYm) (%)a equity (x) (CNYm) (%)a (x) 2008 (x)
BOC 1,017,328 30.9 8.8 977,255 29.2 8.8 +1.9
ICBC 864,475 18.9 9.5 852,343 19.1 9.2 +1.3
ABC 858,900 27.7 n.a n.a. n.a. n.a. n.a.
CCB 731,414 19.3 9.3 834,209 21.7 9.6 +1.0
Merchants 277,805 31.8 16.0 413,740 42.4 19.3 +4.9
BCOM 400,628 30.2 10.9 364,139 25.1 11.4 +1.7
Minsheng 245,574 37.3 15.6 354,996 48.0 18.9 +5.3
CITIC 323,824 48.7 10.0 282,013 33.4 11.4 +2.5
SPDB 241,154 34.6 20.1 255,124 29.0 24.3 +3.1
CEB 148,664 32.0 n.a n.a. n.a. n.a. n.a.
IND 141,647 28.4 12.2 206,674 36.5 14.6 +3.0
HXB 70,434 19.8 15.1 88,599 18.8 19.9 +2.8
SZDB 58,605 20.7 19.1 67,069 16.5 26.5 +1.5
BoB 56,750 29.4 7.1 53,216 27.1 7.1 +1.2
BoSH 59,560 34.4 12.0 40,113 22.0 11.5 +1.7
GDB n.a. n.a. n.a. n.a. n.a. n.a. n.a.
a
Un‐annualised
Source: Bank financial statements, Fitch

Chinese Banks – Annual Review and Outlook

December 2009  3 
 Banks
With growth of assets outstripping growth of equity almost across the board, every
bank reporting H109 data showed a rise in leverage. By end‐June 2009, the most
highly leveraged Chinese banks under Fitch’s coverage had levels of non‐bank credit
exposure to equity of 20x or more, well above historical averages in China and
other Asian countries (see Chart 4). Fortunately, four of the five most highly
leveraged banks — Shenzhen Development Bank, Shanghai Pudong Development
Bank, China Minsheng Banking Corp. and China Merchants Bank — have raised or are
in the process of raising additional equity in H209. While this will lower these
figures somewhat, leverage ratios are likely to remain high relative to the rest of
the region, and will continue to be a key factor placing downward pressure on
Chinese banks’ Individual Ratings.

Where Did the Money Go?

Chart 5: Corporate Loans One of the core factors underlying Fitch’s concerns about the medium‐term asset
Up, Profits Down quality outlook for Chinese banks is their aggressive lending to what is a
qualitatively weaker corporate sector (see Chart 5; note that all figures in this
Profit growth (LHS)
(% yoy) Loan growth (RHS) (% yoy) section apply to CNY loans only as no sectoral data is available on foreign‐currency
45 40
loans). Just under 79% of the new loans extended by Chinese banks from end‐2008
to end‐Q309 went to corporate borrowers, while the remaining 21% were retail
15 30
loans (of which close to one‐third were small business retail loans). In nominal
‐15 20 terms, this amounts to CNY6.8trn (just under USD1trn) in net new corporate loans
‐45 10
in January‐September 2009, which is greater than total net new corporate lending
in 2007 and 2008 combined. Add to this another CNY870bn in net new corporate
07

08

09
06
07

07
07
08

08
08
09

09

fixed‐income issuance during the period, and it is no wonder that the Chinese
Aug

Aug

Aug
May

May

May
Nov
Feb

Nov
Feb

Nov
Feb

Source: Bloomberg
corporate sector has begun to revive.
The key question heading into next year is whether the February 2009 bottoming of
corporate profitability reflects an improvement in core earnings power of Chinese
enterprises, or is simply a product of cheap, loose credit. To the extent the latter is
the case, enterprises could begin to face difficulties later next year as monetary
policy begins to tighten. With close to a quarter of all outstanding discounted bills
already having matured in Q309, some Chinese corporates are already starting to
face an effective interest rate increase as these bills, which were extended at rates
in the neighbourhood of 2% on average, are rolled over into regular loans at a
minimum rate of 4.4% (six‐month loans priced at 0.9x the base rate).
Close to two‐thirds of the corporate loans extended from end‐2008 to Q309 were
medium‐ to long‐term credits, the vast majority of which had been extended to
infrastructure‐related projects or entities, followed by local government financing
platforms (which fall under the category “leasing and commercial services”),
property development, and manufacturing (see Chart 6). The borrowers involved in
these activities tend to be among China’s larger enterprises and have closer ties to
the central and/or local governments, both of which make them a safe haven for
banks in this more difficult environment. 

Chart 6: Sectoral Breakdown of Net New Loans, End‐2008 to End‐Q309

Other 
2.5% 
Small business retail  Leasing & commercial 
6.7%  services 
6.8% 
Consumer 
14.5%  Property development 
5.5% 
Other  Infrastructure 
Corporate discounted  49.3%  Manufacturing 
24.1% 
bills  5.0% 
10.1% 
Other 
Corporate short­term  7.9% 
16.9% 
Source: PBOC

Chinese Banks – Annual Review and Outlook

December 2009  4 
 Banks
After a quiet start of the year, retail lending began to accelerate in March 2009 in
tandem with the stronger residential property market and the government’s push to
increase credit to consumers and small enterprises (in China, loans to very small
businesses and farm households are recorded as retail loans). In Q309, net new
retail loans exceeded net new corporate loans by a margin of 1.5:1. Problems with
credit card lending have increasingly been in the headlines, but it is important to
keep in mind that the scale of such loans remains extremely small, comprising less
than 1% of total outstanding loans for the 16 Chinese commercial banks under
Fitch’s coverage, although some institutions clearly have larger exposure than
others, eg China Merchants Bank at 2.9% of total loans in H109. Chinese regulators
also have been quite proactive on this issue, encouraging banks to monitor their
credit card portfolios more closely and to reduce their reliance on third‐party
marketers of cards. 

Chart 7: Loan vs. Asset

Performance 
Growth
Historically, the performance of Chinese banks has tended to be broadly
Loan growth
comparable due to very similar balance sheet and earnings structures. However, in
(%) the wake of this year’s credit boom, Chinese banks have begun to demonstrate
Asset growth
30 noticeable differences in a number of areas as institutions pursue different
25 strategies to cope with the fall in net interest margin (NIM) and fund growth.
20 Nevertheless, a few universal themes are worth highlighting:
15
· Although loan growth has been very brisk across the sector, growth of total
2005 2006 2007 2008 H109
assets has tended to be more muted as Chinese banks reduce their balances of
Source: Bank financial statements; Fitch
safer, liquid assets and channel them into lending (see Chart 7). This has helped
prop up key ratios such as RoAA and equity/assets, but also contributed to a
very noticeable rise in some banks’ exposure to credit risk.
· Although data for the entire system shows deposit growth lagging loan growth
since February 2009, in reality nine of China’s 12 listed banks posted increases
in the nominal amount of customer deposits that exceeded the rise in gross
loans through end‐Q309. China’s large state banks in particular have benefited
from an influx of deposits associated with the ramp up of numerous central‐ and
local‐government infrastructure projects. In aggregate, gross new loans at state
banks amounted to 79% of their total deposit intake through Q309 (excludes
Agricultural Bank of China).
· Although slower growth of assets has helped prop up equity/assets ratios, risk‐
adjusted capital ratios have fallen across the board for listed banks due to rising
credit exposure and rapid growth of off‐balance‐sheet items. By Q309, the
average Tier 1 and total capital adequacy ratios (CARs) for listed banks
reporting data had fallen 73bp and 74bp, respectively, from end‐2008.
Earnings
Despite a sizeable contraction in loan‐to‐deposit spreads, net income of most
Chinese banks has held up extremely well in 2009. The average RoAA of China’s 12

Chart 8: Listed Banks' Earnings Breakdown

Percent of average assets
2007 2008 H109
(%)
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Net interest Non‐interest Operating costs Impairment Taxes RoAA
revenue income charges
Source: Bank financial statements, Fitch

Chinese Banks – Annual Review and Outlook

December 2009  5 
 Banks
Table 3: Changes to Components of RoAA (End‐2008 to End‐H109)
No. of percentage points
Revenue Expensesa
Net interest Investment Net fees+ other Operating Impairment Non‐recurring Total
revenue gains + losses income costs charges Taxes items + other change in RoAA
SZDB −0.54 0.06 ‐0.08 −0.10 −1.34 0.13 0 0.76
Minsheng −0.75 ‐0.02 ‐0.04 −0.27 −0.18 0.02 0.79 0.42
BOC −0.57 −0.02 ‐0.03 −0.30 −0.43 −0.02 ‐0.02 0.11
ICBC −0.68 0.06 0.04 −0.18 −0.41 −0.05 ‐0.02 0.04
CCB −0.73 0.10 ‐0.05 −0.27 −0.41 −0.02 0.01 0.02
HXB −1.02 0.37 0.02 −0.20 −0.33 −0.07 0 −0.03
IND −0.64 0.03 ‐0.08 −0.24 −0.36 0.01 0.02 −0.09
BoSH −0.89 −0.17 0.04 −0.41 −0.41 −0.09 0 −0.10
CITIC −0.92 −0.02 ‐0.03 −0.38 −0.39 −0.10 0 −0.11
BoB −0.65 −0.13 0.01 −0.27 −0.36 −0.03 ‐0.02 −0.13
BCOM −0.73 0.02 0 −0.37 −0.15 −0.06 0 −0.13
SPDB −0.87 0 ‐0.06 −0.60 −0.08 −0.01 0 −0.24
Merchants −1.19 0.15 ‐0.08 −0.25 −0.01 −0.26 0.06 −0.54
a
Negative figures represent a decline in expenses, thereby providing a positive contribution to RoAA
Source: Bank financial statements; Fitch

listed banks rose 2bp to 1.07% in H109, while net income as a share of total average
business volume (the sum of on‐balance‐sheet assets plus total reported off‐
balance‐sheet items) remained unchanged at 0.99% (see Chart 8). How RoAA held
steady amid a drop in NIM is partly explained by the slower growth of total assets
compared with loans, noted above. In addition, net income for each bank was also
boosted by varying combinations of reduced credit and operating costs, non‐
recurring items, and increased non‐interest income from acceptances, advisory and
consulting services, and fair value/other gains on securities (see Table 3).
Notwithstanding the dramatically different credit environment in H209, Fitch
expects year‐end net profitability will remain broadly in line with that reported at
mid‐year. Although NIM began rebounding in Q309 as expiring discounted bills were
shifted into regular, higher‐yielding loans, this rise in net interest revenue is being
quickly offset by declining fee and commission income growth from slower
expansion of off‐balance‐sheet items and, for some institutions, higher operating
expenses and credit costs.
In an environment in which corporate profits continue to contract, one would
expect credit impairment charges to be a major factor weighing on Chinese banks’
profitability. However, in some cases, the China Banking Regulatory Commission’s
(CBRC) new 150% loan loss reserve coverage target appears to be having the
unintended effect of lowering impairment charges for those institutions with
coverage ratios already above the 150% level. (At end‐Q309, only one of China’s
listed banks, Bank of Communications, had a reserve coverage ratio more than 10bp
below the 150% target, while four institutions had ratios above 210%.) Table 3
shows that every listed bank posted a decline in impairment charges in H109,
resulting in an average contribution to RoAA of +37bp. While improving asset quality
contributed to this lowering of credit costs (see Asset Quality section below), the
new 150% reserve coverage target has clearly provided some banks with significant
leeway on this parameter, eg, Industrial Bank, whose loan loss provisioning declined
from 16.7% of pre‐provision profit in 2008 to 1% in H109, while loan loss reserve
coverage fell only 8pp to 219%.
Looking into 2010, NIM should benefit from tightened credit policy as loan growth
slows to the low 20% range and the popularity of low‐yielding discounted bills fades.
However, RoAA is likely to remain in the neighbourhood of 1%‐1.1% in 2010 as
additional revenue is used to make up for lower operating costs and under‐
provisioning in 2009. Increases in administered interest rates are a possibility later
in the year, which would be positive for banks’ NIM as interest rate changes
typically have a faster impact on Chinese banks’ assets, while deposits take longer

Chinese Banks – Annual Review and Outlook

December 2009  6 
 Banks
to re‐price. However, it should be noted that Fitch’s sovereign team expects
monetary tightening will first focus on draining liquidity through higher reserve
requirements and/or central bank issuance, followed secondarily by interest rate
increases to prevent attracting further capital inflows.
Of course, a key unknown that could significantly affect next year’s profitability is
asset quality and associated loan loss impairment charges. As noted earlier, Chinese
corporates could come under greater strain as monetary conditions tighten.
Nevertheless, Fitch does not currently anticipate impairment charges will rise much
beyond historical averages in 2010, though this could change in the event of more
aggressive tightening and/or greater corporate distress.

Asset Quality
For more than a year, Fitch has been voicing concern about the asset quality
outlook for banks in China. But rather than worsening, the asset quality figures
reported by most Chinese banks have actually been improving in 2009. In addition
to declines in nonperforming loan (NPL) and special‐mention (SM) loan ratios from
the denominator effect of fast credit growth, 11 of China’s 12 listed banks posted a
drop in the nominal amount of SM loans, while half recorded a fall in the absolute
amount of NPLs by end‐June 2009 (see Table 4). How does this add up at a time
when the economy has faced its worst downturn in a decade and corporate profits
have been under pressure?

Table 4: Trends in NPLs and SM Loans of China’s 12 Listed Banks

2006 2007 2008 H109
NPLs (CNYm) 417,514 369,351 351,976 331,603
NPLs/gross loans (%) 3.29 2.50 2.04 1.53
SM loans (CNYm) 942,881 744,504 767,458 688,064
SM loans/gross loans (%) 7.43 5.05 4.46 3.18
Gross charge‐offs (CNYm) 27,872 32,447 44,132 21,885
Source: Bank financial statements, Fitch

Fitch has emphasized all along that asset quality deterioration is a medium‐term
issue for banks in China because of the extended time it can take for loans to be
recognized as impaired due to widespread rolling‐over of delinquent credits and the
bullet‐oriented structure of most corporate lending. This is not to be overlooked, as
one could argue that many of the flaws in the global financial system might still be
hidden today if banks in the US had been more lenient in classifying delinquent
mortgages.
Another key reason for the improvement in the nominal amounts of SM loans and
NPLs in 2009 is that some new loans were used to pay off old, delinquent credits.
With Chinese corporates raising over CNY7.7trn from loans and fixed‐income
issuance from January to September 2009, many companies that were strapped for
cash in late 2008 may have been able to repay or become current on past‐due loans
in 2009. The stock of NPLs and SM loans stood at CNY352bn and CNY767bn for
China’s 12 listed banks at end‐2008. These amounts are quite small relative to the
CNY7.7trn in new corporate financing, and one can see how channelling just a small
fraction of new financing toward paying off old delinquent debts could have a
noticeable impact on the balances of NPLs and SM loans.

Assessing the Newly Disclosed Migration Data

One very interesting, but complex new piece of asset quality data that China’s
listed banks began disclosing in 2009 is the downward rates of migration within the
five‐tier loan classification, ie the rate of migration of normal loans to SM or NPL
status, SM loans to NPL status, etc. (see Table 5). At first glance, some of the ratios
appear surprisingly high given how little movement there is each period in the
balances of NPLs, SM loans and charge‐offs. For example, in 2008, listed banks
reported an average migration rate of normal loans to SM or NPL status of 3.7%.

Chinese Banks – Annual Review and Outlook

December 2009  7 
 Banks
According to Fitch’s calculations, this implied somewhere in the neighbourhood of
CNY500bn of combined new NPLs and SM loans in 2008; yet the combined reported
amount of NPLs and SM loans adjusted for charge‐offs rose only CNY50bn for listed
banks during this period. What happened to the other CNY450bn?

Table 5: Five‐Tier Migration Rates Reported by Listed Banks (%)

Normal loans to SM or NPL status SM loans to NPL status
Bank 2007 2008 H109a 2007 2008 H109a
BCOM 1.72 2.32 1.48 13.67 21.72 13.26
CCB 2.96 3.60 1.41 9.43 8.40 3.89
ICBC 3.50 4.60 1.30 10.40 9.30 6.70
BOC 2.62 3.65 1.28 10.79 8.02 4.99
IND 5.53 1.90 1.13 26.29 13.04 10.64
Merchants 4.06 2.52 1.01 15.99 11.89 6.30
HXB 12.02 5.92 1.00 17.06 14.41 9.80
Minsheng 1.23 3.48 0.96 26.96 16.47 7.61
SZDB 1.46 2.78 0.61 62.22 1.90 28.10
SPDB 3.25 4.07 0.59 20.07 22.23 8.45
CITIC 1.20 1.42 0.44 6.12 6.94 4.67
BoB 1.15 7.71 0.16 2.84 0.39 0.19
Average 3.39 3.66 0.95 19.49 11.23 8.72
a
Un‐annualised
Source: Bank financial statements, Fitch

Reconciling Chinese banks’ elevated migration rates with relatively stable nominal
amounts of NPLs and SM loans is extremely difficult in the absence of detailed data
on loan portfolios and loan loss reserves. Nevertheless, after numerous
conversations with Chinese banks on this issue, Fitch has come to two important
conclusions:
· the migration ratios currently reported by many banks appear to be
systematically overstated owing to deficiencies in the mathematical formulas
underlying the ratios; and
· even taking into account this overstatement, it would appear that a
substantially greater amount of loans are migrating to SM and NPL status each
period than changes in the balances of NPLs or SM loans would indicate. This
means that a large number of existing NPLs and SM loans must either be moving
upward in the classification, or getting repaid or disposed of to offset this
downward movement.
With regard to the first point, the formula that the CBRC has suggested banks use
to calculate migration rates requires that all loans within the same class that were
repaid, upgraded or downgraded during the period be subtracted from the
denominator, resulting in systematic understatement of the denominator, and by
extension overstated migration rates.1 For instance, in the example above, Fitch’s
estimate of CNY500bn of combined new NPLs and SM loans was derived by
multiplying 3.7% by the total amount of listed banks’ normal loans at end‐2007, or
CNY13,625bn. However, according to the CBRC’s suggested formula, any normal
loans that were repaid or downgraded during the period should first be subtracted
from this amount. If 50% of normal loans at end‐2007 were repaid or migrated
during 2008 (this is not inconceivable, as 44% of all CNY loans outstanding at end‐
2007 had maturities of one year or less), the implied combined amount of new NPLs

1
Migration formulas typically consist of the nominal amount of loans that migrated during the
period in the numerator, divided by the beginning balance of loans in that category during the
period in the denominator (or ending balance of loans in that category during the prior period).
For example, a migration ratio for normal loans to SM or NPL status of 5% in H109 would typically
mean that 5% of normal loans on 1 January 2009 (or 31 December 2008) migrated to SM or NPL
status by 30 June 2009. However, in China the CBRC instructs banks to subtract from the
denominator all loans within the same class that are repaid or migrate upwards or downwards
during the period, which in turn results in understated denominators and inflated migration rates.

Chinese Banks – Annual Review and Outlook

December 2009  8 
 Banks
and SM loans would be closer to CNY250bn. This is considerably lower than Fitch’s
initial estimate, but remains above the CNY50bn in new NPLs and SM loans adjusted
for charge‐offs.
This brings us to the second point: even though the migration rates are overstated,
they continue to point to substantially greater movement of loans between
categories than fluctuations in the balances of NPLs or SM loans reported each
period would suggest. Precisely what accounts for this discrepancy is difficult to
identify without more comprehensive data, but Fitch believes that a number of
factors are likely at play, including repayments of past NPLs and SM loans, upgrades
of NPLs and SM loans to normal status or the transfer or sale of NPLs and SM loans
to other financial institutions. Lastly, it should be noted that although most banks
use the CBRC’s formula, it is not mandatory, and some banks employ their own
formulas. Consequently, migration rates at one bank may not always be comparable
with those at other banks.
Because of these numerous issues with the data, the migration rates currently
reported by Chinese banks cannot be relied upon to accurately gauge the flow of
new problem loans, or to evaluate one bank’s migration rates against another’s.
Until there is more consistency in the formulas, the data can only reliably be used
to assess trends within a single bank’s own data set. Looking at the figures from this
perspective shows that a number of listed banks registered a noticeable rise in the
rate of migration of normal loans to SM or NPL status in 2008 — which is consistent
with the rise in impairment charges (see Chart 8) — followed by an improvement in
H109 due to the reasons cited earlier (note that the H109 migration figures are not
annualised). The CBRC reportedly is re‐evaluating its suggested formula for
calculating migration rates, and changes may be made in the future.
Capital
Given the extent of on‐ and off‐balance‐sheet expansion in 2009, it is no surprise
that the capital ratios of most Chinese banks have eroded noticeably this year (see
Table 6). In response, a number of mid‐tier nationwide banks have raised or are in
the process of raising additional equity, and even China’s large state banks, which
are generally better capitalized than smaller entities, have stated that they are
considering additional capital raising, although these efforts may be focused
initially on Tier 2 instruments. While certainly positive, in many cases the amounts

Table 6: Changes in Key Capitalization Ratios

Tangible equity/
Total CAR Tier 1 CAR tangible assets
Q309 Change from Q309 Change from Q309 Change from
Bank (%) 2007 (bp) (%) 2007 (bp) (%) 2007 (bp)
BoBa 16.12 ‐399 13.48 ‐399 7.26 ‐26
ICBC 12.60 ‐49 9.86 ‐113 5.20 ‐79
CITIC 11.24 ‐403 9.84 ‐330 7.22 ‐107
CCB 12.11 ‐47 9.57 ‐80 5.54 ‐57
BOC 11.63 ‐171 9.37 ‐130 6.16 ‐125
BoSHa 10.09 ‐118 8.51 ‐79 4.65 ‐6
BCOM 12.52 ‐192 8.08 ‐219 4.85 ‐140
ABCb 9.41 n.a. 8.04 n.a. 3.77 n.a.
IND 10.63 ‐110 7.50 ‐133 4.38 ‐14
HXBa 10.36 +209 6.84 +254 3.54 +129
SPDB 10.16 +101 6.76 +175 4.09 +102
GDBb 11.63 +449 6.67 ‐48 3.54 +3
Merchants 10.54 +14 6.61 ‐217 3.76 ‐138
CEBb 9.10 +191 5.98 ‐22 3.72 +59
Minshenga 8.48 ‐225 5.90 ‐150 4.29 ‐115
SZDB 8.60 +283 5.20 ‐57 3.42 ‐25
a
Total and Tier 1 CAR data is from H109
b
Q309 data is unavailable and replaced with end‐2008 data
Note: Underlined banks have raised or are in the process of raising equity in H209‐H110
Source: Bank financial statements, Fitch

Chinese Banks – Annual Review and Outlook

December 2009  9 
 Banks
being raised are just sufficient to bring banks back to their original starting points
in 2007‐2008 before the lending boom, and Fitch does not expect much qualitative
improvement in overall capitalization levels compared with the past. In other words,
recent capital‐raising efforts are simply making up for lost ground in 2009.
Fitch has received numerous inquiries about how much capital Chinese banks need to
raise, and, in that context, what benchmark levels Fitch requires for different rating
categories. Of course, capitalization makes up only one component of the agency’s
assessment of Chinese banks, and there are no specific targets for any given rating level.
That said, given the rise in hidden credit exposure from the growing popularity of
unreported loan sales, as well as ongoing weaknesses in loan classification, Fitch would
prefer to see Chinese banks maintaining levels of capital at the upper end of regional
peers, which currently is not the case (see Chart 4 on page 3).
Over the past year, the CBRC has tightened capital requirements by restricting
subordinated debt to no more than 25% of core capital, imposing a minimum 10%
total CAR for those banks wanting to open new branches or expand into new lines of
business (eg, loans for mergers and acquisitions), requiring that banks deduct from
their own supplementary capital any holdings of other banks’ subordinated debt
purchased after 1 July 2009, and requiring that state‐owned and joint‐stock banks
have a minimum 7% Tier 1 CAR in order to issue Tier 2 instruments (5% for smaller
institutions). In practice, this means that banks need to have in the neighbourhood
of a 7%‐8% Tier 1 CAR to reach the new effective minimum of a 10% total CAR. At
end‐Q309, half of the 16 Chinese commercial banks under coverage had Tier 1 CARs
below this 8% threshold. Of these entities, six have raised or are in the process of
raising additional core capital, which should lift these banks’ Tier 1 CARs to 8%‐9%.
Given Fitch’s expectations for continued elevated credit growth, capital burn is
likely to remain a central issue in 2010 and 2011. Over the longer term, greater
equilibrium between the pace of growth and internal capital generation is needed,
and can be achieved by a combination of more restrained balance sheet expansion,
improved non‐interest sources of income and more sustainable dividend payout
policies, particularly for state‐owned banks, which have been distributing on the
order of 40%‐50% of net income in dividends each year.

Risk‐Adjusted Capital Ratios Alone Are Insufficient in Assessing Capitalization

Over the past year, Fitch has become increasingly focused on measures of leverage
when assessing Chinese banks’ capitalization, rather than on risk‐adjusted capital ratios,
due to what the agency perceives to be growing distortions in Chinese banks’
calculations of risk‐weighted assets from rapid growth of acceptances, discounted bills
and government‐related lending. These distortions include inconsistencies in the way
Chinese banks record exposures to off‐balance‐sheet acceptances and on‐balance‐sheet
discounted bills when they serve as both the accepting and the discounting bank, and
variations in risk weightings assigned to government‐related borrowers.
Chart 9 shows that despite a rise in the share of loans to total assets from end‐2008
to end‐H109, the average risk weighting for on‐balance‐sheet assets declined for
most banks reporting data. Given the minimal amount of residential mortgage
lending in H109 (and still small, albeit rising, corporate securities holdings, which
are discussed under Rising Credit and Liquidity Risk in the Interbank and
Investment Portfolios below), this discrepancy must be attributable to a shift in the
risk profile of corporate borrowers from either: (1) a greater share of borrowers
falling under the category “government‐related”; or (2) a greater share of
corporate loans being comprised of discounted bills, which carry lower risk
weightings as interbank exposures.2

2
Interbank exposures carry a 0% risk weighting if less than 4 months in maturity and a 20% risk
weighting for anything beyond this. Corporate entities invested in by the central government
qualify for a 50% risk weighting versus 100% for other corporate loans.

Chinese Banks – Annual Review and Outlook

December 2009  10 
 Banks
Chart 9: Share of Loans Up, But Average Risk Weighting of Assets Down
Change from end‐2008 to end‐H109, no. of percentage points
Change in ratio of loans/assets Change in average risk weighting for on‐balance‐sheet assets
15

10

‐5
Merchants CITIC ICBC CCB BOC BoB SZDB

Note: Comparable data for other banks is not available

Source: Bank financial statements, Fitch

Similarly, Chart 10 shows a decline in the average risk weighting for off balance
sheet items in H109 for those banks reporting data. Generally speaking, banks with
larger gaps in Chart 10 tend to have larger off‐balance‐sheet positions and higher
balances of acceptances, which are often assessed net of pledged deposits when
calculating risk‐weighted assets. Because of this recent volatility in risk weightings,
Fitch believes it is important for market participants to consider a range of metrics
when examining Chinese banks’ capitalization rather than focusing solely on Tier 1
and total CARs, as these ratios can be heavily determined by internal decisions
about how to categorize and weight different exposures.

Chart 10: Average Risk Weighting of Off‐Balance‐Sheet Items also Down

Risk‐weighted amount of off‐balance‐sheet items as % of total disclosed off‐balance‐sheet items
2008 H109
60%

45%

30%

15%
n.a. n.a.
0%
Merchants CITIC ICBC CCB BOC BCOM BoB BoSH SZDB

Note: Comparable data for other banks is not available

Source: Bank financial statements, Fitch 

Key Themes in 2010 
Few banking sectors in the world are undergoing as rapid change as China’s, and
the list of areas to keep an eye on in the year ahead could fill this page. As
discussed in the previous section, one of the foremost challenges facing Chinese
banks and regulators in 2010 will be balancing continued brisk growth amid
accelerating capital burn. In addition, there are two other areas that Fitch believes
warrant close monitoring in 2010: the proliferation of unreported loan transactions
and concurrent rise in hidden credit exposure; and rising credit and liquidity risk in
Chinese banks’ interbank and investment securities portfolios.

Unreported Loan Transactions and Rising Hidden Credit Exposure

Over the past two years, the most disconcerting trend Fitch has observed in China’s
banking sector is the growing prominence of unreported loan transactions. In a
special report in September 2008 (see Related Research on front page), the agency
highlighted one type of this activity, which is the sale and re‐packaging of loans
into wealth management products that are then sold on to investors. Since that
time, Fitch has noticed the growing popularity of another type of transaction,
which is the outright sale of loans to other financial institutions. In both instances,

Chinese Banks – Annual Review and Outlook

December 2009  11 
 Banks
the vast majority of activity is not recorded by Chinese banks on‐ or off‐balance‐
sheet, and therefore is invisible to investors and analysts.
While there are push and pull factors driving both types of activity, the overriding
motivations are to help Chinese banks free up space to extend new loans, and to
come into compliance with loan quotas and regulations on capital, liquidity,
concentration and sectoral exposures. Whenever one or more of these parameters
becomes more binding, activity tends to accelerate, eg in H209. Banks explain that
they do not disclose these deals in their financial statements because the full credit
risk of the loans has been transferred to investors/buyers, and therefore they face
no direct exposure to losses. However, Fitch believes that Chinese banks could still
be reputationally liable. Indeed, in the very few instances of default on loans
underlying wealth management products to date, Chinese banks either have
stepped in and completely covered investor losses, or are engaged in heated legal
disputes.
While Fitch has major concerns about the transparency of this activity, it
recognizes that to some extent it is a natural outgrowth of a rapidly developing
financial system, where capacity to extend new credit is facilitated by active
securitization markets. However, China is in the awkward position of having
reached the point where greater securitization could be helpful precisely at a time
when the reputation of all securitization activity has suffered a major blow.
Nevertheless, allowing such activity to continue in an unregulated manner with
extremely poor disclosure could lead to substantial hidden contingent liabilities,
and is one of the major factors weighing on the Individual Ratings of Chinese banks.
Fitch’s concerns about these transactions centre on three core issues:

· A larger portion of Chinese banks’ capital may be exposed to credit losses than
on‐ and off‐balance‐sheet exposures would suggest, and therefore current
capital ratios may be even more strained than they appear.
· The growing popularity of these transactions is increasingly distorting credit
growth figures at an institutional and systemic level, contributing to pervasive
understatement of loan growth.
· Although there have been extremely few instances of asset quality problems
with loans sold and/or re‐packaged to date, permitting banks to transfer all of
the credit risk to third parties shields them from the consequences of bad credit
decisions, which over time could foster the same type of recklessness witnessed
with the securitization of subprime loans in the US.
Outright Sales of Loans
While outright sales of loans have been taking place for some time in China’s
banking sector, there are anecdotal reports that this activity increased noticeably
in H209 as the authorities pressured banks to slow loan growth and raise capital
ratios. Information on loan sales is extremely limited, and no public data
whatsoever is available on the nominal amount of these transactions. However,
there have been recent media reports citing a figure of CNY800bn in total loan sales
in 2008 compared with CNY4.9trn in new loans. This figure is impossible to verify
due to poor disclosure, but appears reasonable based on the very limited data Fitch
has seen.
Because of the growing distortions caused to credit growth figures, loan sales have
garnered an increasing amount of official attention in recent months. The China
Foreign Exchange Trade System (CFETS) under the People’s Bank of China (PBOC)
reportedly has submitted a proposal to the State Council to set up a formal trading
platform for loan sales, which would be a very positive development and provide
much‐needed transparency to this activity.

Chinese Banks – Annual Review and Outlook

December 2009  12 
 Banks
The principal sellers of loans tend to be China’s nationwide banks, while the buyers
typically are small financial institutions with excess cash on hand, such as city
commercial banks, credit cooperatives, trust companies and finance companies.
Another large purchaser of loans is China Postal Savings Bank, which, as China’s
fifth largest deposit‐taking institution, has abundant liquidity relative to its small
lending operations.
Purchasing institutions typically pay 10%‐20% below the base interest rate for the
loan, and selling banks record the income in fees and commissions. Typically,
selling banks continue to service the loans, collecting payments from borrowers and
passing these funds onto the institutions that purchased the loans. Selling banks will
sometimes enter a counter‐agreement to re‐purchase the loan at a later date. In
these instances, the loans may not appear on either the seller’s or the buyer’s
financial statements, and the loan may temporarily vanish.

Sales and Re‐Packaging of Loans into Wealth Management Products

Data on the sale and re‐packaging of loans into wealth management products is also
sparse, but observers are able to track activity by the number of products issued
each month. Chart 2 on page 2 of this report is re‐displayed below, and shows an
acceleration in re‐packagings in the latter half of 2009 from 884 new products
issued in H109 to 1,736 from July to November 2009. Broken out by bank, it shows
that the institutions most heavily involved in this activity in 2009 are China
Merchants Bank, China CITIC Bank, China Construction Bank and Bank of
Communications (see Chart 11).

Chart 2: No. of Loan‐Related Wealth Management Products Issued

Loan‐only products Products with loans as a core component

1,250

1,000

750

500

250

0
Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Oct‐Nov
09

Source: Wind, Fitch

No comprehensive information is available on the nominal amounts of loans

underlying these products, though some small local data providers will publish such
data from time to time. Usually these figures only cover a small subset of loan‐
related wealth management products, and therefore significantly understate the
true nominal amount of transactions. Nevertheless, it is possible to derive from this
information an estimation of the average size of products, which has risen

Chart 11: No. of Loan‐Related Wealth Management Products Issued

2007 2008 H109 Jul‐Nov 09
1,500
1,250
1,000
750
500
250
0
Merchants

banks
Minsheng

Other
CCB

BCOM

CEB

SPDB

BoB

HXB

SZDB

GDB
ICBC

ABC

BOC
CITIC

BoSH
IND

Source: Wind, Fitch

Chinese Banks – Annual Review and Outlook

December 2009  13 
 Banks
noticeably recently from roughly CNY180m per product in H109 to CNY440m in Q309.
Without more complete information, it is difficult to identify what is behind this
increase, but some observers have attributed this trend to a rise in the scale of
transactions conducted by state‐owned banks. This indeed may be the case, though
it is worth noting that state banks’ share of the number of products issued has
dropped over this period to 22% during July to November 2009 from 34% in H109.
In most re‐packaging transactions, Chinese banks sell a portion of their own loans to
a third‐party, most commonly trust companies, which re‐package the loans into
wealth management products. The products are then re‐sold by the bank and/or
trust company to retail and corporate investors looking for relatively safe, higher‐
yielding investments. 3 The majority of products offer investors little to no
diversification of risk, and are built around a single borrower (occasionally multiple
borrowers if the underlying assets are discounted bills). Occasionally, product
managers will include some non‐loan assets in the products, such as Ministry of
Finance or central bank securities or commercial paper, to offer some
diversification, though the majority of the product is backed by loan‐related assets.
No secondary trading of the products is available, making them highly illiquid.
Additional key features include the following:
· The products have a wide range of maturities — one of the chief attractions for
investors — from as short as a couple of weeks to as long as three years, and
generally match that of the underlying loans (see Chart 12). Occasionally, when
there is a maturity mismatch between the product and the loans, banks will use
cash raised from new products to pay off old ones.
· The products typically offer yields 100bp‐200bp above respective deposit rates.
In the past, banks often guaranteed the principal on the wealth management
products, or pledged to unconditionally re‐purchase the products at maturity.
Guarantees have since been banned, but in some cases, third‐party guarantees
of the underlying loans remain present.
· In some cases, Chinese banks may also be exposed to the investing side of these
transactions, having purchased such wealth management products from other
banks and trust companies for their own investment portfolios (only two banks
disclosed such holdings in H109: China Minsheng Bank and Industrial Bank).

Chart 12: No. of Loan‐Related Wealth Management Products by Maturities

Dec 09 H110 H210 2011‐12 Unspecified
600

400

200

0
Merchants

Minsheng

banks
BoSH
IND
CCB

BCOM

CEB

SPDB

BoB

Other
HXB

SZDB

GDB
ICBC

ABC
CITIC

BOC

Source: Wind, Fitch

Due to the perceived high credit quality of the underlying loans and the fact that
little to no direct exposure is retained once the product is sold, Chinese banks
argue that they face minimal risk of losses from such deals. Nevertheless, in the
event borrowers were to default, Fitch believes that banks could still be

3
In some cases, banks will sell products in which the underlying loans were originated by a trust
company or other banks. Although the distributing bank has less involvement with the underlying
loans in this latter type of transaction, Fitch believes Chinese banks’ role as distributors could
still make them reputationally liable in the event of losses.

Chinese Banks – Annual Review and Outlook

December 2009  14 
 Banks
reputationally liable for some portion of losses, as it is unlikely the government
would allow investors, many of which are retail, to bear the full brunt of losses —
reference the recent Lehman Brothers minibond scandal in Hong Kong.
This is further underscored by the lack of clarity about product features in some
disclosure statements provided to investors. It is not inconceivable to envisage a
situation in which a large portion of investors could claim to have been misled
about a wealth management product’s underlying assets or guarantees, arguing that
they purchased the products based on the reputation of the bank.
In recent weeks, the CBRC has released for comment proposed guidelines governing
this activity. The first version of the guidelines could have led to a significant
reduction in transactions, and hence met strong resistance from participating
financial institutions. The latest version appears to be less stringent and calls on
trust companies to take more active ownership of and responsibility for the loan
assets underlying the wealth management products. It also proposes an increase in
the minimum investment required for a single investor, which often varies by bank
but currently is in the neighbourhood of CNY50,000.
Rising Credit and Liquidity Risk in the Interbank and Investment Portfolios
The interbank and investment securities portfolios of Chinese banks historically
have been dominated by sovereign‐ or quasi‐sovereign‐related exposures, such as
MOF, PBOC and policy bank instruments along with some holdings of US Treasuries
etc. Because these assets are considered to have quite low credit risk and high
liquidity, analysts often overlook the interbank and investment securities portfolios
when assessing the overall risk profile of Chinese banks.
However, in the past couple of years, Fitch has noticed a number of banks
purchasing larger amounts of corporate‐related securities in a search for yield,
while at the same time it is becoming increasingly commonplace to see banks
holding reverse repurchase agreement assets that are collateralized by loans or
discounted bills (see Charts 13 and 14).

Chart 13: Corporate Securities as Share of Total Investment Securities

2008 H109
(%)
30

20

10

0
Merchants

Minsheng

SZDB

SPDB

BoB

CCB

HXB
BCOM

BOC

ICBC
CITIC
IND

Source: Bank financial statements, Fitch

Chart 14: Breakdown of Interbank Portfolios, H109

Non‐repo interbank Rev. repos backed by securities Rev. repos backed by loans & bills
100%
80%
60%
40%
20%
0%
Merchants
Minsheng

BoSH
IND
HXB

SZDB

GDB

SPDB

BCOM

CCB
BoB

CEB

ABC

ICBC
CITIC

BOC

Source: Bank financial statements, Fitch

Chinese Banks – Annual Review and Outlook

December 2009  15 
 Banks
The main implication of these developments is that the interbank and investment
securities portfolios of Chinese banks are displaying greater credit and liquidity risk
than in the past. Consequently, in a time of crisis, these portfolios may not provide
the level of ready liquidity one would expect. This is further underscored by the
sizeable amount of securities that are locked up in pledges at some institutions,
which are as high as 25%‐35% of total investment securities at some of China’s
smaller nationwide banks.

This is not to say that major problems are expected in the interbank or investment
securities portfolios down the road. Indeed, some of the increased credit risk is
already addressed through higher risk weightings for corporate securities holdings.
Nevertheless, Fitch believes there are some potential fault lines in these portfolios
that could become an issue in the event of a systemic disruption in interbank and
fixed‐income markets.

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Copyright © 2009 by Fitch, Inc., Fitch Ratings Ltd. and its subsidiaries. One State Street Plaza, NY, NY 10004.Telephone: 1‐800‐753‐4824,
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Chinese Banks – Annual Review and Outlook

December 2009  16