Asia Banks Strategy 2015:Not All Easing is Created Equal

Key Themes for the Outset of 2015n Key OW Stocks in Markets: China: BOC, CCB; India: AXSB, HDFCB, LICHF; Indonesia: BBRI, BBNI; Philippines,SECB. Broad macro drivers for those names include…

    China: multiple expansion; stocks still price in ~3.6% of NPLs; quality of leverage is improving.

    India: accelerating corporate growth; capital-constraints at PSUs offer opportunities for taking market share;

    Indonesia: volume growth & earnings revisions as loan growth halved the past 3 quarters; government influenceon pricing remains a risk, but one worth taking given the macro backdrop;

    Philippines: consistent, 20%+ loan growth at the moment likely to sustain even with higher real rates.

    Markets facing broader headwinds: Australia, Malaysia, Korea, Thailand。

    Malaysia: rising funding pressure squeezing bank NIMs, commodity risks. Thailand: banks are stretched onvaluations, loan growth likely to remain subdued; deposit costs a new pressure in 4Q results;

    Korea: policy easing would likely have more a negative impact on NIM compression given operating leverage.

    Key Themes for the Year: improving deposit growth; disinflation & monetary policy flexibility; falling oil – opportunitiesand risks; where we see room to restart the capex cycle