China Banks:Just one more step towards full interest rate liberalization

PBOC officially rolls out NCDs for individuals and enterprises with minimum amount of RMB300,000 and RMB10mn, respectively, effective 2 June 2015.

    We see limited impact on China banks in terms of margin and net profit, judging from the current deposit rates of listed China banks after PBOC lifted the ceiling to 1.5x benchmark.

    PBOC is likely to complete interest rate liberalization in 2H15 at the earliest given only one step left - removing the cap on deposit rates. We expect receding impact from these last two steps and continue projecting 22/14/8bps YoY NIM contraction in FY15/16/17E for sector.