For the first five months of 2007, RMB incremental credit has reached RMB 2090 billion, up by RMB 311.5 billion. For the whole 2006, RMB incremental credit only realized RMB 3180 billion; while by the end of May 2007, loans balance has increased by 16% with a rapider growth rate. Therefore, it's estimated that for the whole year of 2007, incremental RMB credit will be about RMB 3300 billion with growth rate of about 14.5%. 

Till the end of May 2007, M1 and M2 have witnessed year-on-year growth of 19.28% and 16.74% respectively Meanwhile, as RMB appreciation speeds up, liquidity of money market will also further increase.

Till the end of 2006, number of banks with targeted capital adequacy ratio has rose to 100, up by 47 over that at the beginning of 2006. Totally speaking, the up-to-standard rate reaches 66.7%. Furthermore, assets of banks with targeted capital adequacy ratio, also accounted for 77.4% of total assets of commercial banks, up by 2.3 percentage points over that at the end of 2005.

Monthly Comparison of RMB Incremental Credit, January 2005-May 2007

Assets Distribution Structure of Listed Banks at the end of 2006

 (ICBC=Industrial and Commercial Bank of China; BC=Bank of China; CCB=China Construction Bank; BCM=Bank of Communications; CMBC=China Merchants Bank; CITIC=China CITIC Bank; SPDB=Shanghai Pudong Development Bank; CMSB=China Minsheng Bank; CIB=Industrial Bank Co., Ltd; HXB=Huaxia Bank; SDB=Shenzhen Development Bank)

Comparison of Net Profit Margin of Listed Banks before Provision

(ICBC=Industrial and Commercial Bank of China; BC=Bank of China; CCB=China Construction Bank; BCM=Bank of Communications; CMBC=China Merchants Bank; CITIC=China CITIC Bank; SPDB=Shanghai Pudong Development Bank; CMSB=China Minsheng Bank; CIB=Industrial Bank Co., Ltd; HXB=Huaxia Bank; SDB=Shenzhen Development Bank)

2 Forecast on Policies for Banking Industry in the Second Half of 2007 

2.1 Monetary Policy keeps a Sound but Tense Situation 
2.2 RMB Appreciation speeds up 
2.3 Financial Innovations

3 Analysis on Operation of Listed Banks 
3.1 Growth of Loans slows down
3.1.1 Macro Tightening will restrain Loans Growth to some extent 
3.1.2 Disintermediation Effect is still limited 
3.1.3 Capital Adequacy Ratio and Capital Regulation
3.1.4 Liquidity of Banks 
3.1.5 Growth of Macro-economy speed up Loans Growth 
3.2 Net Interest Margin keeps balanced 
3.2.1 Net Interest Margin of Deposits and Loans
3.2.2 Market Profitability of China Bond Market 
3.2.3 Assets Distribution Structure 
3.3 Credit Cost reduced 
3.3.1 Improvements in Governance and Risk Management of Listed Banks 
3.3.2 Profitability of Non-financial Enterprises gets advanced  
3.3.3 Mortgages for Bank Loans increase in values, and also Bad Debt Rate drops 
3.3.4 Agricultural Bank of China runs Systems Reform and then is listed in Stock Exchange 
3.4 Intermediary Business of Banks rapidly increases 

4 Analysis on Listed Banks 
4.1 Comparison of Advantages between Listed Banks 
4.2 Shenzhen Development Bank Co., Ltd 
4.3 China Merchants Bank 
4.4 Shanghai Pudong Development Bank 
4.5 Industrial and Commercial Bank of China 
4.6 China Minsheng Banking Corp., Ltd. and Industrial Bank Co., Ltd