...State Support Remains Intact: The stable rating outlook reflects our expectation of continued state support, which remains the sole rating driver for Chinese bank IDRs. Another challenging year is looming for banks. The acceleration in financial reform over 2015 is likely to weigh heavily on margins, underpinning our negative sector outlook. Additional capital-raising will help to mitigate pressure on capital and loss-absorption capacities from asset growth and rising bad debt, but we expect profits to decline. Credit Growth Slowing: We estimate that credit growth (based on Fitch's adjusted measure of total social financing, FATSF) slowed to around 14% in 2015, and expect it to ease back further to 13% in 2016 ¡ though still above nominal GDP growth of 8.4%, based on Fitch's sovereign team forecasts. FATSF/GDP is likely to reach 260% by end-2016 (2015 estimate: 250%). Removal of the statutory loan-to-deposit ratio cap should reduce incentives for banks to lend off-balance- sheet, and we...
