China Banking Industry: Outlook and Opportunities Assessment 2006-2007
The Asian Banker, February 2006, Pages: 108
This document contains: Report published by Asian Banker Research
DESCRIPTION ABOUT THIS DOCUMENT
Data and risk analysis for the planning and decision making needs of all investors and service providers building their business strategy for China's financial services industry today.
Based on the considerable demand for a greater understanding of the trends affecting the Chinese banking industry today, The Asian Banker is publishing a comprehensive report that is of great importance to all decision makers assessing the banks in China.
The report reflects the publisher's extensive and continued interviews with top regulators, CEOs and senior executives from the full cross-section of banks in the country, as well as investors, suppliers and consultants who do business with Chinese banks. The report is supported by a strong set of data, charts and tables that provide conceptual insights, as well as hard-nosed facts that decision makers can work into their own assessments.
The report offers the best intuitive insights into how foreign players should build their business strategy in China today. The report provides a strong big picture perspective of the key themes driving China?s banking industry today, supported by strong operational and business level observations that provides the reader with an idea of the tactical issues they will need to deal with when doing business in China.
The Asian Banker Industry Assessment Report 2006 on China assess the profile and prospects of China?s banking industry, helps you understand the drivers affecting the growth potential of the banking industry in the country and learn the banks competitive positioning relative to each other.
The report is aimed at:
- All organisations doing business with China's banks or operating in the industry at a business or operational level
- Consultants and private equity players advising and assessing Chinese banks
- Banks, investors and financial services players evaluating the investment potential and competition of the Chinese banking industry
- Vendors assessing the market potential for technology investments amongst the different categories of banks in China
- Regulators and correspondent banks assessing risk-based issues facing China's banking industry today
List of Data and Charts
All data comprise latest available figures, (e) expected - (f) forecast
Macro-Economic Environment
- The Chinese economic growth prospects, 2003-2007(f)
- Bank lending growth vs. GDP growth, 2000-2007(f)
- Consumer sentiment, 2001-2006
- Regional comparison of household financial assets mix
- Chinese business sentiment 2004-2006(e)
Macro-Banking Environment
- Financial intermediation trends in China 1999-2004
- Liquidity profile of the Chinese banking system 2003-2005
- Liberalisation of interest rates 2004-2007(f)
- Banks? net interest margin forecasts 2001-2007(f)
- Number and type of banking institutions in China
- Domination by the big players
- China's top 10 banks by asset size
- China's top 10 banks by deposit size
Business Composition and Operational Focus
- Top 10 revenue generators for Chinese banks 2005-2007(f)
- Fee income comparisons between different banks
- Cost structure vs. profitability
- The official NPL level of selected individual banks, 2002-2005
- The official NPL level of state-owned banks and joint-stock banks, 2004-2005
- Bank credit growth
- CAR vs. LDR vs. YoY Credit Growth
- Regional comparison of CAR and NPL ratios
- Banks? capital raising and IPO prospects
- Slow expansion of selected foreign banks? branch network in China
- List of foreign acquisition deals, 2004-2005
- Foreign banks? assets as % of the banking sector, 2002-2006
Distribution and Penetration
- Branch growth of the big four state-owned banks, 2000-2007(f)
- Branch growth of the joint-stock banks, 2000-2007(f)
- The Asian Banker Perception survey on branch strategy
- Fee income as % of total operating revenue vs. fee income per branch
- ATM penetration in China and peer countries
- ATM growth of Chinese banks, 2002-2007(f)
- Bank Card growth with regards to total issuance and transaction value, 2002-2007(f)
- Merchant acceptance growth in China, 2002-2007(f)
Tracking Technology and Infrastructure
- Mapping the IT infrastructure of banks in China
- Mapping Chinese banks in achieving IT customisation and optimization
- Level of system integration vs. intention to adopt new technology
Appendices: China Banking Data Series
- Basic statistical data
-- Macro data (GDP, Population, Population age distribution GDP/Capita)
-- Price indices (Consumer and producer price indices)
-- Monetary statistics (Narrow money (M1), Money supply (M2), Broad money (M3)
-- Inflation and unemployment (Inflation, Labour force, Unemployment, Exchange rate)
- Household demographics
-- Number of households (HHs), % urban population, HH income, HH income/GDP (%), Number of HHs by income band, Total HH borrowings, HH borrowings/HH income, HH borrowings/GDP (%)
-- Gross domestic savings, Gross domestic savings/GDP (%)
-- Poverty (Population in poverty, Income ratio of the highest 20% to the lowest 20%, Gini coefficient)
- Banking industry profile
-- GDP from finance (GDP, GDP contribution from finance)
-- Number of financial institutions by category, Number of inhabitants: per bank, per commercial bank, per branch
-- Deposits in banks (Current deposits, Certificate of deposits, Term deposits, Others)
-- Average interest rates (Deposits: Savings, Time; Loans and discounts)
- Retail distribution
-- ATMs (Number of networks, Number of machines, ATM penetration, Value of ATM transactions, Average valueper transaction, Volume of transactions, Number of transactions/person)
-- EFTPOS (Number of networks, Number of terminals, EFTPOS penetration, Value of EFTPOS transactions, Average value per transaction, Volume of transactions, Number of transactions/person)
-- Bank branches (Number of branches, Branch penetration)
-- Infrastructure penetration rates (Fixed-line telephone, Mobile phones, Personal computers, Internet)
- Payment systems
-- Cash (Cash penetration, Cash penetration as a % of GDP)
-- Credit cards (Number of cards, card penetration, Value of transactions (US$ millions, per card, per person), Billing as a % of HH income, Volume of transactions, Average value/transaction)
-- Debit cards (Number of cards, card penetration, Value of transactions (US$ millions, per card, per person), Volume of transactions, Average value/transaction)
-- Cheques (Value of transactions, Volume of transactions)
- Financial profile
-- Balance sheet (Total assets, Loans, Deposits, Equity, Non- performing loans, NPLs as a % of total loans, NPLs as a % of GDP)
-- Income statement (Net interest revenue, Other operating income, Overheads, Profits, Tier-1 capital)
-- Ratios (Operations: Return on average equity, Return on average assets, Cost-to-income ratio, Net interest margins; Liquidity: Net loans-to-total assets, Net loans-to-deposits; Capital: Equity-to-total assets)
Chapter 1. Macroeconomic Environment
This chapter discusses the economic fundamentals that are relevant to the banking industry in China today. The report looks at China's GDP growth prospects and Chinese consumer and business sentiment to evaluate the prospects for bank lending growth. It identifies the sources of future growth as customer sophistication and the revenue mix of banks evolve.
Chapter 2. Macro-Banking Environment
The second chapter provides an overview of the financial intermediation business, both at the institutional level as well as balance sheet levels of specific banks. Based on the strategies communicated to us by leading CEOs, the report profiles how banks in China will play out with the liquidity overhang and interest rate deregulation in the market today. It uses the charts collated to draw a picture of motivations driving banks to differentiate themselves in the marketplace and compete for market share. It discusses ways in which both investors and service providers should assess the institutional capability of Chinese banks to focus on profit.
Chapter3. Business Composition and Operational Focus
This chapter is designed to give readers an insight into the business composition of the banks themselves, down to the product level. The report assesses how they will develop a good mix of businesses with good tenures to strengthen their balance sheets. It also looks at the balance sheets and work out how the potential for fee-based income as well as strong credit growth will play out. Based on the publisher's interviews with leading figures in the Chinese banking industry, it also evaluates and segment the types of banks which are likely to come to market for an IPO in the medium term, and also the potential impact of foreign players on the market.
Chapter 4. Distribution and Penetration
In this chapter the report looks at the state and future of channel infrastructure, and examine the different strategies and technology modernisation programs that are undertaken at branches and with the ATM networks. The report looks into the current state of fee generation capabilities of branches to answer the question why is there a gap between aspiration and implementation. It examines China's promising payment card market, and investigate why having a strong credit card proposition is not enough to succeed. ATM, cards and device manufacturers will find this chapter and the data in the appendices useful in making their own assessment for market entry.
Chapter 5. Tracking Technology and Infrastructure
In evaluating the current level of IT evolution the report maps out the profile of each banks? infrastructure. It looks into the operational profile to answer how much progress banks have made, and which banks are ahead in the race. By using highly insightful operational and conceptual charts, it positions future winners on their customisation and optimisation in sales capabilities and reveal which banks are more inclined to systematically integrate new technology in their operations. It also assess how advanced are Chinese banks in Basel II preparations and evaluate their asset quality, and how these relate to the commitments being made from Beijing. IT vendors and consultants will find this chapter useful from a prospecting point of view, but investors will also understand better the roadmap that Chinese banks will have to take in investing in new technology to become better players.
Chapter 6-8. Major challenges, key concerns and conclusions
We look into the major challenges for the banking industry as a whole, and also for foreign and domestic players, in the wake of banking liberalisation and the transformation of domestic banks into modern financial institutions. By identifying key areas of concern in risk and asset management, performance and operations, capital rising activities, distribution and penetration channels as well as IT infrastructure, it brings together the publisher's key findings in a unified and comprehensive view for business applications and strategy discussions for the benefit of investors, players in the marketplace, as well as service providers and consultants wanting to serve the Chinese banks. Readers will find the publisher's key conclusions useful for their business decision making needs.
9 Appendices: China Banking Data Series
The report is supported by a full range of latest available primary data at the operational and business levels that decision makers will need for making their own assessments. The report also makes its own projections for the benefit of readers who need data for planning purposes. Purchasers of the report may have access to the publisher's research analysts on the use of this rich compendium of data.
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