UBS report: NAO audit findings bring limited financial impact on Chinese banks; Bank of Zhongyuan lists Rmb 25.29bn asset package for NPL disposal

研报英文原文证据摘录

UBS report: NAO audit findings bring limited financial impact on Chinese banks; Bank of Zhongyuan lists Rmb 25.29bn asset package for NPL disposal

Global Research

26 June 2026ab

Greater China Banks Daily Equities

ChinaUBS report: NAO audit findings bring limited

financial impact on Chinese banks; Bank of Banks

Zhongyuan lists Rmb 25.29bn asset package for MayAnalystYan

NPL disposal may.yan@ubs.com+852-2971 7157

Alex Ye

Analyst

UBS report: NAO audit findings bring limited financial impact on Chinese banks S1460522090005

alex.ye@ubs.com

H-share China banks fell on June 25, 2026 (led by BOC-H: -5.3%) after the NAO’s 2025 +86 755 2215 8858

audit report flagged compliance, internal-control, and policy execution issues across

several banks (BOC, ABC, ICBC, CCB, BOCOM, CITIC, etc.), although the report is part Catherine Yang, CFA

of a routine annual audit rather than a targeted sector probe. The NAO process typically

S1460526010003

results in remediation requirements, with follow-up actions handled by regulators rather

catherine-za.yang@ubs.com

than immediate punitive measures. Direct financial impact appears limited, with +86-755-2215 8860

penalties relatively small (e.g., SOE banks’ 2025 fines of ~RMB649mn equal to ~0.05%

Helen Li, CFAof combined net profit), while BOC’s RMB2.37bn tax shortfall is ~1% of its earnings,

indicating manageable downside. We believe the market reaction is primarily driven by helen-za.li@ubs.com

governance concerns and uncertainty over rectification rather than fundamental +852-2971 6066

deterioration. While potential second-order impacts (e.g., changes in fund structures or

bond investment behavior) may emerge, they are contained. Overall, we view this as a

moderate sentiment-driven setback and remain constructive on China banks, supported