The document provides an overview of China's banking industry as of August 2011, highlighting the significant growth in bank deposits and loans driven by government policies and central bank regulations. It discusses the dominance of the 'big four' state-owned banks while noting the rising competition from commercial and smaller banks, along with the increasing presence of foreign banks. Additionally, it examines key performance indicators and macroeconomic policies influencing the banking sector's development and reforms.

1. Banking Industry – China
August 2011

2. Executive Summary
China has largely weathered the financial crisis with the government stimulus package being channeled through
the banks, which has resulted in large expansion of bank lending
Bank deposits and loans have both been growing strongly in China, owing to the regulations of the central bank
Industry to improve the performance of the banking sector
Four state-owned banks of China, referred to as the ‘Big Four’, primarily dominated the banking sector, but lately
commercial and other smaller banks are also rapidly gaining market share
Loan-to-Deposit Ratio
Capital Adequacy Ratio
Key Performance
Non-Performing Loan Ratio
Indicators Provision Coverage Ratio
Profitability
Macroeconomic environment of China’s banking sector
Macroeconomic Adjusting the pace of credit supply
Policies Supporting economic restructuring and industrial upgrading
Participating in national policy formulation
China’s Banking Reform Development
Segment-wise Reform Policies
Banking Reform
Opening up of the Banking Sector
Development
Financial Innovation and Regulation
Implementation of BASEL II and Basel III
Domestic Players Foreign Players
Competition
Player 1 Player 2 Player 3 Player 4 Player 5 Player 6
BANKING INDUSTRY IN CHINA 2011.PPT 2

3. •Introduction
•Industry Overview
•Key Performance Indicators
•Foreign Ownership
•Macroeconomic Policies
•Banking Reform Development
•Future Outlook
•Competition
BANKING INDUSTRY IN CHINA 2011.PPT 3

4. China's banking industry has significant government control
but banks have gained more autonomy over time
Banking Industry in China
China Banking Regulatory Commission (CBRC)
Primarily responsible for the formulation of supervisory rules and regulations governing the banking institutions and their
business operations in China
PLE
Central Bank (People’s Bank of China)
M
Vested with the authority to implement policies and regulations throughout the banking institutions in China
State-owned
Commercial Banks
• Bank of China
SA Joint-stock
Commercial Banks
•Bank of Communications
City Commercial Banks
•Bank of Beijing
• China Construction Bank •China Merchant’s Bank •Bank of Shanghai
Rural Commercial
Policy Banks Foreign Banks
Banks
• China Development Bank
• Guangzhou Rural •Bank of East Asia
• Export-Import Bank of
Commercial Bank •Standard Chartered Bank
China
Source: Note: The list is not exhaustive
BANKING INDUSTRY IN CHINA 2011.PPT 4

5. Rising bank interest rates to curb lending and encourage
higher deposits in China
Banking Industry – Total Deposits and Loans of Banking Institutions
• Bank deposits and loans have both been growing strongly in China, owing to the regulations of the central bank to
improve the performance of the banking sector
• In Apr 20--, the government raised the one-year bank deposit rate to a% and the one- year lending rate to b%, both by
a quarter of a percentage point
Raising interest rates would encourage higher deposits and lower lending, which would help reduce spending and ease upward
pressure on prices
Total Deposits Total Loans
USD bn
Trust deposits
Other deposits
PL
Deposits of enterprises
Saving deposits E Trust loans
Other loans
Short-term loans
Medium- & long-term loans
M
Bill financing
USD bn
X%
SA Y%
0 0
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
Source:
BANKING INDUSTRY IN CHINA 2011.PPT 5

6. Key Performance Indicators (1/5)
Loan-to-Deposit Ratio Total Loans and Deposits
• Loan-to-deposit ratio is the proportion of loan-assets Total Loans
created by banks from the deposits received Total Deposits
• It indicates how much of the advances lent by banks Loan-to-deposit ratio
is done through deposits USD tr %
• Higher the ratio, the higher the loan-assets created
from deposits
E
• Outcome of this ratio reflects the ability of the bank
L
to make optimal use of the available resources
Performance Analysis
MP
• As of 20--, deposits maintained by banking
institutions increased by a % year-on-year
SA
Household saving deposits grew by b% year-on-year
Corporate deposits rose by c% year-on-year
0
2006 2007
Ratio (2010)
2008 2009
Value
2010
Change
• Outstanding balance of loans made by banking
Loan-to-Deposit Ratio x% y
institutions went up by d% year-on-year
Note: Year-on-year change indicated in percentage points
Short-term loans grew by e% year-on-year
Medium-to-long term loans grew by f% year-on-year Low loan-to-deposit ratio on account of increasing
Consumer loans increased by g% year-on-year deposits and decreasing loans represents a
Bill financing declined by h% year-on-year favourable scenario for the sector
Source:
BANKING INDUSTRY IN CHINA 2011.PPT 6

7. Foreign banks are gradually increasing their presence in
China’s banking sector
Foreign Ownership – Overview Foreign Ownership – Growth
• As of end-20--, a banks from b countries and regions No.
set up c representative offices in China X%
d banks from e countries and regions were locally
incorporated which maintained f branches
Foreign banks have presence in g cities of h provinces
• In 20--, foreign banks performed sound with
sufficient capital, good asset quality, reasonable 0
profitability and abundant liquidity
Foreign Ownership – Segmentation
PLE 2006 2007 2008
Foreign Ownership – Growth of Assets
2009 2010
Locally incorporated institutions (LII)
Foreign Bank Branches
LII branches and subsidiaries
S
WFO companiesM
Wholly foreign-owned banks (WFO)
A
Joint-venture banks
USD bn
Share of Total Bank Assets
Foreign Bank Assets
Y% %
2010
0 0.0
2006 2007 2008 2009 2010
Source:
BANKING INDUSTRY IN CHINA 2011.PPT 7

8. Macroeconomic Policies – Summary
Participating in national policy Macroeconomic environment of
formulation China’s banking sector
Key
Policies
Supporting economic
Adjusting the pace of credit
restructuring and industrial
upgrading supply
BANKING INDUSTRY IN CHINA 2011.PPT 8

9. Banking Reform Development – Summary
China’s Banking Reform
Development
Implementation of BASEL II Segment-wise Reform
and Basel III Policies
Key Initiatives
Financial Innovation and
Opening up of the Banking Sector
Regulation
BANKING INDUSTRY IN CHINA 2011.PPT 9

10. Major Domestic Players in the Market (x/y)
Company Snapshot: Player
Corporate Information Financial Performance
Headquarters City 1 Revenue
Revenue Profit
Profit / Loss
USD bn USD bn
Founded ----
Products and
Product 1, Product 2, Product 3
Services
Key People Person 1 – Co-Chairman
PLE 0
2007 2008 2009 2010
0
Business Highlights
SAM
• Player 1 and Player 2 have signed a comprehensive cooperation agreement
• Player and W Municipal Government to jointly launch an investment fund
• Has signed a MoU with Player to promote trade relations and financial cooperation across the Taiwan
• Player and University of ABC have inked a scholarship MOU
• Has finished first round of institutional layout for private banking
• Player has gone into operation in Beijing
• Has also signed a MOU with XYZ
Source:
BANKING INDUSTRY IN CHINA 2011.PPT 10

11. Thank you for the attention
The Banking Industry - China report is a part of Netscribes’ Financial Services Series.
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