Chinese banks' net income growth to slow to 9% in Q3

Blame it on these two culprits.

According to Bernstein Research, it expects Q3 net income growth of 9% (YoY) for the Chinese Banks, a slowdown from 13% in H1. Major headwinds are 1) rising credit costs and 2) decelerating fee income growth.

Here's more:

We expect YoY earnings growth of the Big 4 Banks will outpace the smaller banks in Q3 2013 (10% vs. 5%) for the 4th quarter of the past 5.

ROE: The group's average ROE in Q3 '13 will be 19.5%, down 180bp YoY, driven by declining leverage for the group and weakness in their ROAs of the smaller banks. Within the group, we expect the ROAs of the Big 4 Banks to be flat but fall by 15bp YoY at the smaller banks to 1.08%.