Chinese banks:Dec 2017banking data~Credit growth slowed amid policy tightening

CBRC advocated strengthening regulations; credit growth will slow further

    New loans of Rmb548bn and TSF of Rmb1.14tr fell short of consensus for Dec2017, leading to slower credit growth of 13.8% (Nov: 14.4%), if adjusted formuni bonds and equity financing. In 2018, we expect credit growth to slow to12-13% yoy (Fig 1), given continued tightening. The CBRC announced on 13Jan it will deepen regulatory controls on incompliant activities. After 8monthsof self-checking by banks, which unveiled Rmb17.6tr incompliant assets (7% oftotal banking assets), the CBRC has shifted focus from self-checking torequiring rectification, which could impose pressure on capital and earnings ofsmaller banks. We remain cautious on corporate-orientated banks.

    Circular No.4in 2018