China banks predicted to have steady profit growth at 11% in 1H13

CCB expected to deliver higher profit growth.

Barclays expects steady headline profit growth in 1H13 and estimates average profit growth for 1H13 at 11% y/y, on stable sequential NIM, recovering fee income growth and steady credit cost.

Here's more from Barclays:

Fee income could be the growth engine in 2Q13, with average growth of 30% y/y vs 26% in 1Q13, mainly driven by credit card, wealth management and guarantee fees. Net interest income growth could be stable (+10% y/y in 2Q vs +10% y/y in 1Q) on flattish NIM (-2bps q/q in 2Q).

Investors' concerns to focus on asset quality and interbank business: The NPL amount could post a moderate increase (+6.3% q/q in 2Q13) amid the slowing macro environment.

Due to recent regulatory tightening in the interbank market and the interbank rate spike in late June, we estimate banks' interbank business could be shrinking, with most of the impact seen in 2H13.

Winners and losers during the results season: Heading into the results season, we prefer CCB among the big banks, estimating it to deliver higher profit growth (+13% y/y in 1H), stable NIM and steady asset quality.

Among the mid-sized banks, we prefer Minsheng, mainly due to: 1) high expected profit growth (+17% y/y in 1H); 2) strong fee income (+45% y/y); and 3) expected slowdown of the risky interbank business.