In our effort to keep relevant stakeholders continuously informed on the latest developments and trends in the Chinese banking industry, this project will be a regular fixture in the future, with follow-up surveys. We look forward to hearing your feedback on this report, and suggestions on topics to be included in future surveys on China's banking industry. For further information, please contact the PwC Financial Services, China Banking Association, or the project leader.

Executive Summary

Part Ⅰ The Economic Situation

 Ⅰ.Complex and uncertain economic trends and significant operational

diversities among business enterprises

 Ⅱ.Uncertainties in the real estate market bring huge pressure on bankers

 Ⅲ.Bankers recognize the effects of macroeconomic policy but give

low score to industrial policy

 Ⅳ.Transformation of economic development model and adjustment of

industrial structure as the external environment factors that draw

the most attention of Chinese bankers

 Ⅴ.Financial ecological environments are better, and the construction

of the credit environment and the legal environments are at the core

Part Ⅱ Development Strategies

 Ⅰ.Fierce horizontal competition and increasing pressure in attracting

customer deposits identified as biggest challenges in bank operations

 Ⅱ.Transformation of the business structure as the top priority in the

bank's strategy adjustment

 Ⅲ.SME financial service, the important orientation for transformation

of the bank's customer base

 Ⅳ.Attention to rural financial services incrementally increasing

 Ⅴ.Insurance industry, the first-choice for comprehensive operations

 Ⅵ.Seize opportunities and implement the"going global" strategy to

first set foot in surrounding countries and regions

Part Ⅲ Business Development

 Ⅰ.Infrastructure and new energy industry arouse attention and the

credit supply is curbed in "high-pollution, high-energy-consumption,

and overproduction" industries

 Ⅱ.Developing investment banking services to cope with challenges from

financial disintermediation

 Ⅲ.Wealth management as the key for the development of personal

financial services

 Ⅳ.Personal mortgage loan standards are increasingly tightened,

and the cultivation of credit card brand characteristics is taken

as the core

 Ⅴ."Expanding the e-banking channel and promoting the transformation

of outlet functions" regarded as the key in channel construction

Part Ⅳ Risk Management

 Ⅰ.Non-performing loans likely to rise periodically but unlikely to

increase structurally

 Ⅱ.Attitude to the real estate-related business development is

cautious, and the concern about its associated risk is paramount

 Ⅲ.Difficulties in learning about the local government's overall

debt situation is a bottleneck for the risks involved in managing

government-financing platforms

 Ⅳ.Reinforcement of risk management contributes to business development

 Ⅴ.Credit risk is also most critical, and compliance risk attracts

more concerns

 Ⅵ.Improving the risk quantification level is the key to implementing

the New Basel Capital Accord

Part Ⅴ Corporate Governance

 Ⅰ.Large room for improvement for incentive and monitoring mechanisms

 Ⅱ.Satisfaction with present"head office and branch" management structures

 Ⅲ.Relatively healthy information disclosure system, consistently

improving internal management transparency

Part Ⅵ Information Systems

 Ⅰ.Information systems continue to draw attention from bankers

 Ⅱ.Different priorities when building information systems, and large

commercial banks have better information systems

 Ⅲ.Data mining and information integration are top priorities of

future information system construction

Part Ⅶ Human Resources

 Ⅰ.Growth of employee numbers expected to slow down; unlisted

banks to expand rapidly

 Ⅱ.Talent succession planning, salary systems, and training

mechanisms await improvement

Part Ⅷ Corporate Culture

 Ⅰ.Promotional slogans highlight the core values and operational

philosophies

 Ⅱ.Corporate culture construction universally emphasized

Part Ⅸ Assessment of Regulatory Policies

 Ⅰ.Regulatory policies universally recognized

 Ⅱ.Counter-cyclical capital regulation and leverage ratio regulation

recognized by bankers

 Ⅲ.Improved differentiation of regulatory indicators and development

of diversified capital replenishment channels

 Ⅳ.New lending rules widely accepted and overall implementation in

good order

 Ⅴ.Balance between financial stability and financial innovation to

define good regulation

 Ⅵ.Tax policies should take full account of the banking industry's

development needs

Part Ⅹ The Bankers

 Ⅰ.Strategic management and business development abilities viewed as

bankers' foremost qualities

 Ⅱ.Urgency in improving innovation capacities at the phase of transformation

 Ⅲ.All-round talent competition mechanism to cultivate more good bankers

Part Ⅺ Forward-looking Opinions

 Ⅰ.ProJection of income growth and profit

 Ⅱ.Projection of non-performing loan ratios and provision coverage

 Ⅲ.CAR projection

Appendix

 Introduction of the project background and its implementation

 Top 30 banks in the Chinese banking industry

 Working together to deliver success

Interview Notes

 Interview Notes Ⅰ From economic transformation to financial transformation

 Interview Notes Ⅱ SME financial services advanced to a strategic height

 Interview Notes Ⅲ Go to the countryside!

 Interview Notes Ⅳ On boosting comprehensive business operations

 Interview Notes Ⅴ Accumulate strength to promote globalization

 Interview Notes Ⅵ The optimization and upgrading of the industrial

structures boost the adjustment of the credit structures

 Interview Notes Ⅶ Actively expanding investment banking

 Interview Notes Ⅷ Private banking struggles to get going

 Interview Notes Ⅸ Looking out for the real estate market's short-term risks

 Interview Notes Ⅹ The risk associated with local government-financing

platform loans is manageable overall, but potential risks require attention

 Interview Notes Ⅺ Exploring the scientific organizational structures

and performance evaluation mechanisms