Chinese banks:Looking beyond 2Q17-what we learned from banks’briefings

Expecting gradual improvement in NIM and NPL; staying positive on big banksDespite stronger-than-expected results from the big banks (see Quality resultsfrom quality banks), share prices corrected in the past two days, which webelieve was due to investors profit-taking and selling the facts. This was notjustified by fundamentals. In this report we summarize key takeaways from thebanks’ 1H17analysts’ briefings. Management teams in general have becomemore optimistic on the marginal improvement in key operating trends (Figure1). Looking ahead, we suggest investors focus on the gradually improving NIMand asset quality for the big banks in coming quarters. We expect big banks’PPOP up 12% in 2H17from 2H16’s low base. Top picks: ICBC and BOC.