Core Viewpoint - Hangzhou Bank has demonstrated a strong commitment to shareholder returns through its mid-term dividend plan, reflecting its robust operational performance and asset quality in the first three quarters of 2025 [1][2] Dividend Plan - The bank announced a mid-term dividend of 0.38 yuan per share, which is an increase from the previous year's 0.37 yuan per share, despite a 20.83% increase in total ordinary shares due to a 15 billion yuan convertible bond redemption [1][2] - The total cash dividend distribution will amount to 2.755 billion yuan (including tax), representing a 24.10% increase compared to the previous year's mid-term dividend [2] Operational Performance - For the first three quarters of 2025, Hangzhou Bank reported an operating income of 28.88 billion yuan, a year-on-year increase of 1.35%, with net interest income rising by 9.96% to 20.093 billion yuan and net commission income increasing by 12.65% to 3.298 billion yuan [2] - The net profit attributable to shareholders reached 15.885 billion yuan, reflecting a year-on-year growth of 14.53%, indicating strong profitability and operational resilience [2]

Core Viewpoint - The recent surge in share buybacks by various banks, including Qilu Bank and Qingdao Bank, reflects strong confidence in the long-term value of the banking sector, with over 10 listed banks participating in this trend [1][9][10]. Group 1: Share Buybacks - Qilu Bank announced that its directors, supervisors, and senior executives have collectively increased their holdings by 3.15 million yuan, accounting for 90% of the planned buyback amount [1]. - Qingdao Bank's major shareholder, Qingdao Guoxin Financial Holdings, increased its holdings by 957 million yuan, raising its stake to 15.42%, making it the largest shareholder [4]. - Xiamen Bank's executives completed a buyback plan exceeding the minimum target, with total contributions reaching 1.6857 million yuan [5]. Group 2: Market Sentiment - The buyback activities are interpreted as a recognition of the banking sector's valuation, with a current price-to-book ratio of 0.72 and a dividend yield of 3.99%, attracting long-term capital [10][12]. - The banking sector has seen a collective "self-purchase" phenomenon, with various regional banks also engaging in buybacks, indicating a broader trend across the industry [6][8]. Group 3: Performance and Valuation - Despite a slight decline in revenue and net profit for 42 A-share listed banks in the first quarter, 24 banks reported growth in both metrics, particularly city and rural commercial banks [10]. - The net interest margin for listed banks is projected to stabilize, with a simulated net interest margin of 1.32% for Q3 2025, marking a potential turning point after four years of decline [12]. - Long-term capital, particularly from insurance funds, has been increasingly allocated to the banking sector, with a reported increase of 8.36 billion shares held by insurance funds in Q3 2025 [12][13].

Core Viewpoint - Digital finance is increasingly becoming an important engine for promoting high-quality economic development as part of the "Five Major Articles" initiative [1] Group 1: Industry Developments - The banking industry is actively building platform-based service capabilities to assist enterprises in their digital transformation [1] - CITIC Bank launched the "Xiaotianyuan" enterprise ecological service platform, utilizing a "digital + finance + ecology" innovative model to empower the digital transformation of small and medium-sized enterprises (SMEs) [1] - Hangzhou Bank introduced "Xinyibao 1.0" to meet the diverse and intelligent operational needs of SMEs [1] Group 2: Challenges for SMEs - SMEs face challenges in digital transformation due to high costs and prolonged transition periods, leading to a reluctance to transform [1] - Zhejiang Unicom is addressing these challenges by creating a data element circulation platform and an industrial trusted data space, providing standardized and modular digital solutions to lower the transformation threshold for SMEs [1] Group 3: Recognition and Impact - At the recent 2025 "Data Element Empowerment New Industrialization" competition award ceremony, Zhejiang Unicom had eight projects recognized, covering various advantageous industries in Zhejiang such as smart manufacturing, chemicals, and apparel [1] - The focus of these projects is on solving practical pain points, such as improving product quality, reducing operational costs, and optimizing resource allocation [1]

Market Performance - The city commercial bank sector increased by 0.96% on November 10, with Xiamen Bank leading the gains [1] - The Shanghai Composite Index closed at 4018.6, up 0.53%, while the Shenzhen Component Index closed at 13427.61, up 0.18% [1] Individual Bank Performance - Xiamen Bank's closing price was 7.44, with a rise of 2.90% and a trading volume of 331,500 shares, amounting to 2.44 billion yuan [1] - Shanghai Bank closed at 10.23, up 2.30%, with a trading volume of 652,200 shares and a transaction value of 660 million yuan [1] - Qilu Bank saw a closing price of 6.20, increasing by 1.97%, with a trading volume of 727,200 shares and a transaction value of 450 million yuan [1] - Other notable banks include Changsha Bank, Xi'an Bank, and Suzhou Bank, with respective increases of 1.72%, 1.51%, and 1.32% [1] Capital Flow Analysis - The city commercial bank sector experienced a net inflow of 77.51 million yuan from institutional investors, while retail investors saw a net outflow of 10.29 million yuan [1] - Beijing Bank had a significant net inflow of 1.35 billion yuan from institutional investors, but a net outflow of 582.22 million yuan from retail investors [2] - Jiangsu Bank also reported a net inflow of 103 million yuan from institutional investors, with retail investors experiencing a net outflow of 91.58 million yuan [2]

Core Insights - The article emphasizes the abundance of bank wealth management products with similar names and vague characteristics, urging investors to carefully select and differentiate among them [1] - The research team from Nanfang Finance aims to reduce investors' selection costs by focusing on the performance of wealth management products available through various distribution channels [1] Group 1: Performance Evaluation - The report highlights the performance of mixed-asset products issued by wealth management companies, providing a ranking based on annualized returns over the past month, three months, and six months [1] - The ranking is sorted by the annualized return over the past three months to reflect the products' performance amid recent market fluctuations [1] Group 2: Distribution Channels - A total of 28 distribution institutions are involved in the evaluation, including major banks such as Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, and others [1] - The report notes that the assessment of the "on-sale" status of wealth management products is based on their investment cycles, but actual availability may vary due to factors like sold-out quotas or differences in product listings for different customers [1]

Core Insights - The report highlights the significant growth and development of inclusive finance in China, particularly focusing on small and micro enterprises and rural areas, with a notable annual growth rate of over 20% in inclusive micro loans during the 14th Five-Year Plan period [1][2] - As of June 2025, the balance of inclusive micro loans reached 36 trillion yuan, which is 2.3 times that of the end of the 13th Five-Year Plan, with a decrease in interest rates by 2 percentage points [1][2] - The average interest rate for newly issued inclusive micro loans was 3.48% as of June 2025, reflecting a decrease of 66 basis points year-on-year [1][2] Group 1: Digital Empowerment - Digital technology has been a key driver for the development of inclusive finance, with banks utilizing big data and AI to enhance loan approval efficiency and reduce financing costs [2][7] - The market structure among banks is changing, with large commercial banks holding a 45.11% share of inclusive micro loans, while rural financial institutions have seen a decline in their market share [2][3] - The average growth rate of inclusive micro loans has been slowing down, with a decrease from 30.9% in 2020 to 12.3% by mid-2025 [2][3] Group 2: Performance of Listed Banks - Among listed banks, Agricultural Bank of China, Industrial and Commercial Bank of China, and Beijing Bank reported the highest growth rates in inclusive micro loans at 18.50%, 17.30%, and 17.27% respectively [3][4] - In contrast, some banks, including Shanghai Bank and Zhengzhou Bank, experienced negative growth rates of -3.97% and -2.06% [3][4] - The performance of different banks varies significantly, with state-owned banks generally showing stronger growth in inclusive micro loans compared to smaller banks [3][4] Group 3: Interest Rates and Risk Management - The interest rates for newly issued inclusive micro loans have decreased across various banks, with the highest rate at 4.20% and the lowest at 2.94% [7][8] - The gap in interest rates between large and small banks is narrowing, with some large banks' rates aligning closely with those of smaller banks [8][9] - The report emphasizes the importance of risk management in the inclusive finance sector, with several banks focusing on improving asset quality and managing non-performing loans [9][10]

Summary of China Regional Banks 3Q25 Review Industry Overview - The report focuses on the performance of China Regional Banks (CRBs) in the third quarter of 2025 (3Q25) - Overall profits for CRBs grew by 6% year-over-year (y/y), a decrease from 9% y/y in 2Q25, primarily due to a decline in non-fee income [1][3] Core Earnings and Profitability - CRBs demonstrated a core earnings recovery of 12% y/y, outperforming large banks which only saw a 1% y/y increase in core earnings [1][3] - Net Interest Income (NII) for CRBs grew by an average of 7% y/y, improving from 5% y/y in 2Q25, while large banks averaged only 0.4% growth [3][7] - Fee income increased by 16% y/y, reversing a contraction trend, supported by agency fee growth as market sentiment improved [3][7] - Non-fee income saw a significant decline of 32% y/y, primarily due to fair value losses in bond investments [3][7] Asset Quality - Asset quality remained stable, with the average Non-Performing Loan (NPL) ratio declining by 1 basis point (bps) q/q to 0.96% in 3Q25 [1][21] - The Special Mention Loan (SML) ratio increased by 3 bps q/q, indicating some pressure on asset quality compared to large banks [21] - The NPL coverage ratio decreased slightly by 1 bps q/q, suggesting a cautious approach to provision releases [21] Capital and Growth Constraints - The Common Equity Tier 1 (CET1) ratio for CRBs decreased by 11 bps q/q, raising concerns about growth constraints due to lower capital levels [3][21] - CRBs reported a 2% q/q loan growth, consistent with industry trends, but with significant variations among banks [20] - Deposit growth was flat on average, with BoNB experiencing the highest contraction at -1.4% q/q [20] Investment Recommendations - Top picks among regional banks include BoNB and BoNJ, both showing double-digit growth in core earnings and stable asset quality [1][3] - BoBJ's performance was the weakest, with a profit contraction of 2% y/y and a low CET1 ratio, although its high dividend yield of 5.8% provides some downside protection [1][3] - Caution is advised regarding CSRCB until clearer signs of improvement in SME asset quality are observed [1][3] Valuation Insights - The report includes a valuation comparison of various regional banks, highlighting differences in price-to-earnings (P/E) ratios, price-to-book (P/B) ratios, and return on equity (ROE) [5] - The average P/E for CRBs is projected at 6.1 for FY25E and 5.7 for FY26E, with an average dividend yield of 5.0% for FY25E [5] Conclusion - The overall performance of China Regional Banks in 3Q25 indicates a steady recovery in core earnings, although challenges remain in non-fee income and capital levels. The investment outlook is cautiously optimistic for select banks, particularly BoNB and BoNJ, while caution is warranted for others like CSRCB and BoBJ.

Investment Ratings - Banking: Overweight (Maintain) [1] - Securities: Market Weight (Maintain) [1] - Insurance: Overweight (Maintain) [1] Core Insights - The central bank's resumption of bond purchases aims to alleviate liquidity pressure on banks and enhance their lending capacity [1][4] - The securities industry has shown strong performance in the first three quarters of 2025, with a net profit of CNY 1,837.82 billion, a year-on-year increase of 61.25% [3][50] - The insurance sector is experiencing a strategic adjustment period due to changes in interest rates, with significant profit growth reported by major insurers [4] Summary by Sections Market Review - As of November 6, 2025, the banking, securities, and insurance indices have changed by +0.25%, +0.62%, and -0.67% respectively, while the CSI 300 index increased by +1.89% [12][19] - Among the sub-sectors, Chongqing Bank (+8.44%), Northeast Securities (+10.09%), and China Ping An (+1.90%) performed the best [12][19] Valuation Situation - As of November 6, 2025, the banking sector's price-to-book (PB) ratio is 0.78, with state-owned banks at 0.84 and joint-stock banks at 0.62 [21][22] - The securities sector's PB ratio is 1.54, indicating potential for valuation recovery [25] Recent Market Indicators - The one-year Medium-term Lending Facility (MLF) rate is 2.0%, with the one-year and five-year Loan Prime Rates (LPR) at 3.0% and 3.50% respectively [32][33] - The average daily trading volume of A-shares is CNY 19,673.61 billion, reflecting a decrease of 14.41% [38][40] Industry News - The insurance industry is adapting to new regulatory frameworks and interest rate changes, with a focus on optimizing product structures and enhancing profitability [43][44] - The central bank's actions are expected to provide a more stable liquidity environment for banks, especially as year-end liquidity fluctuations increase [48] Company Announcements - Major banks and insurers have reported varying earnings growth, with significant increases in net profits for companies like China Life and Xinhua Insurance [46][47]

Core Insights - The latest reports indicate a significant increase in personal housing loans from several listed banks, contrasting with the decline observed in state-owned banks' mortgage lending [1][2][6][7] Group 1: Personal Housing Loan Growth - Nearly ten listed banks, including Minsheng Bank, Ping An Bank, and others, reported a clear increase in personal housing loans by the end of Q3 compared to the beginning of the year [1][2] - Specific banks like Ping An Bank reported a housing loan balance of 3,523.50 billion yuan, growing by 8.1% from the beginning of the year [2] - Minsheng Bank's mortgage loan balance increased by 180.41 billion yuan, marking a growth of 3.24% [2] Group 2: State-Owned Banks' Decline - The six major state-owned banks experienced a reduction of over 1,000 billion yuan in personal housing loans in the first half of the year, continuing a downward trend for three consecutive years [1][6] - By the end of Q3, the total personal housing loan balance for these banks was approximately 25.086 trillion yuan, reflecting a decrease of 1,078 billion yuan since the beginning of the year [6] Group 3: Market Dynamics and Regional Insights - The demand for housing loans remains strong in certain regions, such as Jiangsu, Zhejiang, and Shanghai, prompting banks to increase mortgage lending [4][5] - The new personal housing loans issued in key economic regions accounted for 87.70% of the total new loans issued by Shanghai Pudong Development Bank, indicating a regional focus in lending strategies [3] Group 4: Overall Market Trends - As of the end of Q3 2025, the total personal housing loan balance in the market was 37.44 trillion yuan, showing a year-on-year decline of 0.3% despite the growth from smaller banks [7] - The overall trend suggests that while some smaller banks are increasing their mortgage lending, it is not sufficient to offset the overall decline in the personal housing loan market driven by the larger state-owned banks [7]

Core Viewpoint - Recent announcements from multiple banks indicate a trend of redeeming preferred shares, driven by cost optimization and capital structure adjustments in response to regulatory requirements [4][6]. Group 1: Redemption of Preferred Shares - Ningbo Bank plans to fully redeem 100 million preferred shares issued on November 7, 2018, with a total scale of 10 billion RMB, at a redemption price of 104.5 RMB per share, scheduled for November 7, 2025 [1]. - Hangzhou Bank, Shanghai Bank, and Changsha Bank also announced plans to redeem their preferred shares in December 2025, with similar redemption structures [2]. - The total amount of preferred shares redeemed by banks this year is significant, with a focus on optimizing costs and reducing liabilities [1][2]. Group 2: Issuance of Perpetual Bonds - In conjunction with the redemption of high-cost preferred shares, banks are increasingly issuing perpetual bonds as a replacement, with 51 perpetual bonds issued this year totaling 675.4 billion RMB, surpassing last year's figures [1][6]. - Perpetual bonds are seen as a more flexible and lower-cost capital tool compared to preferred shares, which typically have higher dividend rates [4][6]. Group 3: Market Trends and Regulatory Environment - The trend of redeeming preferred shares and issuing perpetual bonds reflects a broader market shift, where banks are adapting to lower interest rates and tighter regulatory requirements [4][7]. - The issuance of perpetual bonds is particularly crucial for smaller banks facing capital adequacy pressures, as they seek to enhance their capital structure and meet regulatory demands [7].