Summary of 4Q25 Results for Chinese Banks Industry Overview - The report focuses on the Chinese banking sector, highlighting the performance of major banks such as CCB (China Construction Bank), BOC (Bank of China), CITIC, Industrial Bank, and PAB (Ping An Bank) in 4Q25 and their outlook for 2026 [1][2][9]. Key Points Revenue and Profit Growth - Signs of stabilizing Net Interest Margin (NIM) and healthy fee income growth were observed in 4Q25, with expectations for above-peer revenue and profit growth in 2026 for CCB, BOC, CITIC, Industrial Bank, and PAB [1][2]. - Revenue growth improved to 2.2% YoY in 4Q25 from 0.6% YoY in 3Q25, with BOC leading at 9.2% YoY growth, followed by Industrial Bank and CITIC at 7.7% and 6.9% respectively [17][23]. NIM and Non-Interest Income - NIM pressure moderated in 4Q25, with banks reporting sequential rebounds. Most banks expect milder NIM pressure in 2026, supporting positive Net Interest Income (NII) growth [2][14]. - Fee income growth accelerated to 8.6% YoY in 4Q25, up from 4.8% YoY in 3Q25, driven by strong retail Asset Under Management (AUM) growth and active capital markets [3][15]. Credit Quality and Costs - Non-Performing Loan (NPL) ratios remained stable for most banks, with proactive write-offs and improving corporate NPL ratios offsetting retail credit quality pressures [4]. - Citic Bank showed a notable decline in NPL ratios, while PSBC and ICBC experienced increases. Expectations for credit costs to rebound for PSBC and ICBC could impact profits despite better revenue growth [4][19]. Earnings and Dividend Outlook - CCB, BOC, CITIC, and Industrial Bank are positioned to achieve healthy earnings with below-peer Risk-Weighted Asset (RWA) growth, allowing for potential future dividend payouts [5]. - The average dividend payout ratio for major banks is projected to remain stable, with slight declines noted for some banks [12]. Management Guidance and Future Outlook - Management from various banks provided guidance for 2026, with CITIC Bank targeting over 3% revenue growth and PAB expecting a return to growth in its retail business [20]. - Banks are cautious about the 2026 outlook, with expectations for income primarily from trading rather than a drop in bond yields [18]. Additional Insights - The report indicates that banks with strong retail AUM growth will continue to see healthy fee income growth in 2026, with several banks confident in their non-interest income growth prospects [3][15]. - Investment income varied significantly in 4Q25, with banks generally cautious about the outlook for 2026 [18]. Conclusion - The Chinese banking sector shows signs of recovery with improving revenue growth, stable credit quality, and a positive outlook for 2026. Key players like CCB, BOC, CITIC, Industrial Bank, and PAB are expected to lead in revenue and profit growth, supported by stable NIM and healthy fee income. However, caution remains regarding credit costs and overall market conditions.

Investment Rating - The report maintains a "Recommended" rating for the company [1]. Core Insights - The company achieved an operating income of 658.31 billion yuan in 2025, representing a year-on-year growth of 4.48%, and a net profit attributable to shareholders of 243.02 billion yuan, with a year-on-year increase of 2.18%, outperforming peers [5]. - The contribution of overseas business to the group's profit reached 27.99%, indicating a continued strengthening of global advantages [5]. - The net interest income was 440.71 billion yuan, slightly down by 1.83% year-on-year, with a net interest margin of 1.26%, a decrease of 14 basis points [5]. - Non-interest income grew by 20.12% year-on-year, accounting for 33.06% of total revenue, driven by a recovery in capital markets and growth in commission income [5]. - The non-performing loan ratio stood at 1.23%, a slight decrease from the beginning of the year, with a provision coverage ratio of 200.37% [5]. Financial Performance Summary - **Revenue and Profit Growth**: The company reported a revenue of 658.31 billion yuan and a net profit of 243.02 billion yuan for 2025, with respective growth rates of 4.48% and 2.18% [30]. - **Interest Income and Margin**: The net interest income was 440.71 billion yuan, with a net interest margin of 1.26% [31]. - **Loan and Deposit Growth**: Total loans reached 23.45 trillion yuan, growing by 8.61% year-on-year, while total deposits increased to 26.18 trillion yuan, up by 8.18% [5]. - **Non-Interest Income**: Non-interest income accounted for 33.06% of total revenue, with significant contributions from wealth management and other services [5]. - **Asset Quality**: The non-performing loan ratio was 1.23%, with a provision coverage ratio of 200.37%, indicating strong risk management [31]. Capital and Valuation Metrics - The core Tier 1 capital adequacy ratio improved to 12.53%, up by 0.71 percentage points from the beginning of the year [5]. - The report forecasts BVPS (Book Value Per Share) for 2026, 2027, and 2028 to be 8.87 yuan, 9.40 yuan, and 9.94 yuan respectively, with corresponding PB (Price to Book) ratios of 0.66X, 0.62X, and 0.59X [5][30].

第 1 頁 共 13 頁 v 1.2.1 | | | | 3. 股份分類 | 優先股 | 股份類別 | 其他類別 (請註明) | 於香港聯交所上市 (註1) | 否 | | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 360033 | 說明 | 境內優先股第三期 | | | | 2. 股份分類 | 普通股 | 股份類別 | A | | 於香港聯交所上市 (註1) | | 否 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 601988 | 說明 | | A股（於上海證券交易所上市） | | | | | | | | 法定/註冊股份數目 | | | 面值 | | 法定/註冊股本 | | | 上月底結存 | | | 238,590,135,419 | RMB | | 1 RMB | | 238,590,135,419 | | 增加 / 減少 (-) | | | 0 | | | RMB | | 0 | | 本月底結存 | | | 238,590,135,419 ...

Core Viewpoint - Goldman Sachs has raised the average pre-provision profit and post-tax net profit forecasts for China Bank (03988.HK) for 2026 to 2028 by 0.6% and 0.4% respectively, reflecting the performance in the fourth quarter of last year and management guidance [1] Group 1: Price Target Adjustments - The target price for China Bank's H-shares has been increased from HKD 4.95 to HKD 5.35 [1] - The target price for China Bank's A-shares has been raised from RMB 6.54 to RMB 6.69 [1] - The overall rating for both A and H shares remains "Buy" [1] Group 2: Market Position and Analyst Attention - China Bank has a market capitalization of HKD 408.91 billion, ranking 5th in the banking industry [1] - There has been low analyst attention on this stock, with no ratings given by investment banks in the past 90 days [1]

Core Viewpoint - Goldman Sachs reported that Bank of China exceeded expectations in its fourth-quarter performance, with pre-provision profit and net profit after tax growing by 8% and 5% year-on-year, respectively, surpassing the bank's forecasts by 8% and 3% [1] Group 1 - The management indicated that the improvement in asset yield stability and the reduction in financing costs due to deposit repricing are beneficial [1] - It is expected that the narrowing of net interest margin will significantly slow down by 2026, with net interest income likely to achieve positive growth [1] Group 2 - Goldman Sachs raised its average pre-provision profit and net profit after tax forecasts for Bank of China for 2026 to 2028 by 0.6% and 0.4%, respectively [1] - The target price for Bank of China H-shares was increased from HKD 4.95 to HKD 5.35, and the target price for A-shares was raised from CNY 6.54 to CNY 6.69, maintaining a "Buy" rating [1]

Core Viewpoint - Goldman Sachs has raised the average pre-provision profit and post-tax net profit forecasts for Bank of China (03988) for 2026 to 2028 by 0.6% and 0.4% respectively, reflecting the performance in Q4 of last year and management guidance [1] Group 1: Financial Performance - Bank of China's Q4 performance exceeded expectations, with pre-provision profit and post-tax net profit growing by 8% and 5% year-on-year, surpassing Goldman Sachs' predictions by 8% and 3% respectively [1] - The management indicated that the stabilization of asset yield and the reduction in deposit repricing costs are expected to significantly slow the narrowing of net interest margin in 2026, with net interest income anticipated to achieve positive growth [1] Group 2: Target Price Adjustments - The target price for Bank of China’s H-shares has been raised from HKD 4.95 to HKD 5.35, while the target price for A-shares has increased from RMB 6.54 to RMB 6.69 [1] - Both A-shares and H-shares maintain a "Buy" rating [1] Group 3: Market Impact - The adjustment of the asset-liability structure is expected to neutralize the impact of the Federal Reserve's interest rate cuts on the net interest margin, indicating no negative effects [1]

Group 1 - The People's Bank of China issued a warning and imposed a fine of 387,000 yuan on the Bank of China, Fangchenggang Branch for violations of financial statistics regulations, account management regulations, credit management regulations, and failure to conduct customer due diligence as required [1][2]

Key Points - The total bond market in mainland China reached 199.70 trillion yuan by the first quarter of 2026, an increase of 3.52 trillion yuan from the beginning of the year [2] - The total issuance of bonds in the first quarter of 2026 was 19.7 trillion yuan, a year-on-year decrease of 4% [2] - The issuance of interest rate bonds increased by 8% year-on-year to 8.5 trillion yuan, while credit bonds remained flat at 4.5 trillion yuan [2][4] - The issuance of interbank certificates of deposit decreased by 19% year-on-year to 6.7 trillion yuan [2] Bond Issuance Breakdown - Interest rate bonds: 837 issues, 851.47 billion yuan, 8% growth [4] - Government bonds: 43 issues, 362.00 billion yuan, 9% growth [4] - Local government bonds: 521 issues, 310.59 billion yuan, 9% growth [4] - Policy bank bonds: 273 issues, 178.82 billion yuan, 3% growth [4] - Credit bonds: 5528 issues, 445.65 billion yuan, 0% growth [4] - Financial bonds: 267 issues, 62.57 billion yuan, 23% decline [4] - Insurance company bonds: 8 issues, 1.81 billion yuan, 63% decline [4] - Securities company bonds: 185 issues, 47.87 billion yuan, 147% growth [4] Bond Underwriting Rankings - The top three banks in bond underwriting for the first quarter of 2026 were China Bank, Construction Bank, and Industrial and Commercial Bank, with underwriting amounts of 359.35 billion yuan, 357.37 billion yuan, and 331.23 billion yuan respectively [10][11] - The top three securities firms in bond underwriting (excluding local government bonds) were CITIC Securities, Guotai Junan, and CITIC Jinpu, with underwriting amounts of 305.59 billion yuan, 245.82 billion yuan, and 198.23 billion yuan respectively [20][24] Trends in Financing Costs - The "CCB-Wind Interbank Bond Issuance Index" indicated a downward trend in financing costs in the first quarter of 2026, with the index currently at around 31.6 [6]

Investment Rating - The industry rating is "Buy" as of April 1, 2026, consistent with the previous rating [5] Core Insights - The report highlights a divergence in performance among banks, with state-owned banks showing renewed vitality despite pressure on net interest margins. The overall revenue and profit growth for 22 listed banks has shown signs of recovery compared to the previous quarters, driven by improvements in effective tax rates, accelerated scale expansion, and a slowdown in the decline of net interest margins [5][20] - The report indicates that the net profit growth for the 22 listed banks is primarily driven by six factors, including the expansion of interest-earning assets and recovery in net fees, while the decline in net interest margins has been the main negative contributor [15][20] Summary by Sections Overall Performance - As of March 30, 2026, 22 A-share listed banks reported a revenue growth of 1.24%, PPOP growth of 0.60%, and net profit growth of 1.30% for 2025, with a quarter-on-quarter recovery observed [14] - The net profit growth drivers include a 7.97% contribution from interest-earning asset expansion and a 0.97% contribution from the recovery of net fees [15] Scale - The report notes that public and bill financing are the main growth drivers, with financial investments continuing to show high growth [9] Net Interest Margin - The net interest margin has stabilized for two consecutive quarters, with expectations for a rebound in 2026 [9] Non-Interest Income - There is a performance divergence in non-interest income, with state-owned banks performing better due to lower exposure to the capital market [9][20] Asset Quality - The report indicates that the asset quality is improving for corporate loans, while retail loans are under pressure [9] Investment Recommendations - The report suggests a favorable outlook for the banking sector in the second quarter, emphasizing its defensive nature amid economic fluctuations [9][20]

Core Viewpoint - China Bank has shown a consistent increase in the number of performance salary clawbacks and the total amount reclaimed over the past three years, indicating a proactive approach to risk management and accountability in its compensation structure [1][7]. Group 1: Performance Salary Clawbacks - In 2025, China Bank executed clawbacks for 4,630 individuals, totaling 47.18 million yuan, marking an increase from 2,469 individuals and 32.50 million yuan in 2024, and 2,059 individuals and 22.75 million yuan in 2023 [1][3]. - Over the three-year period, the bank has cumulatively reclaimed performance salaries from 9,158 individuals, amounting to 102.43 million yuan [1][3]. Group 2: Employee Composition - As of the end of 2025, China Bank employed a total of 313,746 individuals, with 287,855 in domestic institutions and 25,891 in Hong Kong, Macau, Taiwan, and other regions [2][8]. - The bank's workforce increased by 989 individuals year-on-year, reflecting a growth rate of 0.32%, with the highest growth rate in nearly a decade observed in 2024 at 1.9% [2][8]. Group 3: Compensation Structure - China Bank's compensation distribution follows the principle of "salary based on position, pay based on performance," with employee salaries comprising basic pay, performance pay, and benefits [3][9]. - In 2025, the bank's total business and management expenses reached 183.27 billion yuan, with employee expenses accounting for 115.83 billion yuan, an increase of 2.41% from the previous year [3][10]. Group 4: Employee Costs Breakdown - The breakdown of employee expenses includes: - Salaries, bonuses, allowances, and subsidies: 77.86 billion yuan - Employee welfare: 5.67 billion yuan - Retirement benefits: 0.02 billion yuan - Social insurance costs, including medical and pension insurance, totaling 136.72 billion yuan [5][6][10]. - The average employee cost for 2025 is calculated at 369,200 yuan, reflecting a year-on-year increase of 1.82% [10].