AAA Group6

7/29/2019 AAA Group6

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Analysis on ChineseBanking Industry

GROUP MEMBERS:

Yan LiYuanyuan LinShasha LiuGuanlin YangZhimin YangCanhao Zheng


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BackgroundThe total assets of China's bankingindustry rose 17.3 percent to 43.9 trillionyuan (US$5.48 trillion) at the end of 2006,according to the China Banking RegulatoryCommission (CBRC)

The state-owned "Big Four" banks - Bankof China, China Construction Bank, the

Industrial and Commercial Bank of China,and the Agricultural Bank of China - makeup 51.3 percent of the total assets,according to CBRC


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Purpose of the Report

To analyze the performance of sixChinese public listed banks based onperformance measurement & assetquality


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Regulation: Interest Spread

Time Deposit Rate Lending Rate

07.12.20 4.14% 7.47%

07.09.15 3.87% 7.29%

07.08.22 3.60% 7.02%

07.07.20 3.33% 6.84%

07.05.19 3.06% 6.57%

07.03.18 2.79% 6.39%

Change in Interest Spread

3.15%

3.20%3.25%3.30%3.35%3.40%3.45%3.50%3.55%3.60%3.65%

0 7 . 1 2 . 2 0

0 7 . 0 9 . 1 5

0 7 . 0 8 . 2 2

0 7 . 0 7 . 2 0

0 7 . 0 5 . 1 9

0 7 . 0 3 . 1 8

Change in IntSpread


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Regulation: Reservation Rate

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

1 5 J a n

, 2 0 0 7

2 5 F e b

, 2 0 0 7

1 6 A p r

, 2 0 0 7

1 5 M a y

, 2 0 0 7

5 J u

n , 2 0

0 7

1 5 A u g

, 2 0 0 7

2 5 S e p

, 2 0 0 7

2 5 O c t

, 2 0 0 7

2 6 N o v

, 2 0 0 7

2 5 D e c

, 2 0 0 7

2 5 J a n

, 2 0 0 8

1


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Introduction

Bank Total Asset (inmillion)

Net Income(in million)

ICBC 7,388,648 49,900

China ConstructionBank

5,448,511 46,319

Bank of China 5,325,273 41,892

Bank of Communications 1,719,483 12,274

China Merchant Bank 934,102 6,794

Fujian Industrial Bank 617,704 3,798


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ROA*EM=ROE

Rank Bank Ratio

1Bank Of China 0.94%

2

China Construction

Bank

0.92%

3China MerchantBank

0.81%

4Bank of Communications

0.78%

5ICBC 0.71%

6 Fujian IndustrialBank

0.61%

Rank Bank Ratio

1Fujian IndustrialBank

23.45%

2

China Merchant

Bank

16.74%

3ICBC 15.37%

4China ConstructionBank

15.00%

5Bank of Communication

14.15%

6 Bank Of China 13.47%


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Leverage: Equity to Asset (1/EM)

Rank Bank Ratio


2 ICBC 6.27%

3 China Construction Bank 6.06%

4 China Merchant Bank 5.91%

5 Bank of Communication 5.26%

6 Fujian Industrial Bank 2.62%


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Efficiency: Cost/Income

Rank Bank Ratio


2 ICBC 36.30%

3 China Merchant bank 38.28%



6 Bank of communication 47.66%


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NPL

Rank Bank Ratio





5 ICBC 3.79%



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Allowance/NPL vs Allowance/Loan

Rank Bank Ratio

1Fujian Industrial Bank 237.00%

2China Merchant Bank 135.61%

3Bank of China 96.00%


94.81%


82.24%

6 ICBC 70.56%

Rank Bank Ratio

1Bank Of China 4%

2

China Merchant

Bank

2.88%

3ChinaConstructionBank

2.70%

4ICBC 2.68%


2.09%


1.97%


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Liquidity: Loan/Asset

Rank Bank Ratio

1 Bank of China 1.53%




5 ICBC 3.79%



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Core CAR & CAR

Rank Bank Ratio

1ICBC 12.23%



9.92%

4China MerchantBank

9.58%


8.52%


4.80%

Rank Bank Ratio

1ICBC 14.05%


3ChinaConstructionBank

12.11%

4China MerchantBank

11.40%


10.83%


8.71%


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Vertical Comparison

BOC vs Industrial BankWHY?


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Fluctuation From 2005 To 2006

-5.00%0.00%5.00%

10.00%

15.00%20.00%

25.00%30.00%35.00%

40.00%45.00%

ROA ROE COST to Income

Fujian Industrial Bank Bank of China


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-40.00%

-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

Non-performance Loan

Ratio

Allowances to non-

performing loans %

Allowances to total

loans %



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-10.00%-5.00%0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%

40.00%45.00%

loan/asset % Core capital adequacy

ratio%

Capital adequacy ratio% Total equity to total

assets%



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Source of Information

Bank of China 2006 Annual ReportICBC 2006 Annual Report

China Construction Bank 2006Annual ReportBank of Communications 2006

Annual ReportChina Merchant Bank 2006 AnnualReport

Fujian Industrial Bank 2006 Annual


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THANK YOU FOR YOURATTENTION

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