With improving net interest margin and stable loan growth, we believe the recovery of China banks sector continues to be well on track. Moreover, with improving earnings outlook of the Mainland enterprises, we expect the China banks can benefit from rising credit demand. Further, the resultant improving assets quality helps to lower the non-performing loan ratio. Among all, we believe CCB (939), ICBC (1398) and ABC (1288) are well geared to benefit from the industry improvement. Moreover, the valuation remains undemanding.

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