Zhi Tong Cai Jing·2025-06-22 12:56Core Viewpoint - The report from Zhongtai Securities indicates that the banking sector's asset quality remains stable, transitioning from a "pro-cyclical" to a "weak cyclical" phase, with strong performance and dividend stability in the sector [1][2]. Group 1: Banking Sector Overview - The correlation between banks and fiscal policies has strengthened, with major banks having closer ties to central finance and local banks to local finance [2]. - The capital replenishment process for banks is accelerating under the risk prevention framework, with capital replenishment plans already implemented for four major banks, supporting growth for at least the next five years [2]. - The proportion of customers supported by national credit is high among bank clientele, with a stable safety margin for state-owned enterprises [2]. Group 2: Asset Quality and Risk Assessment - The non-performing loan (NPL) ratio for corporate and retail segments is decreasing for corporate loans and increasing for retail loans, with retail NPLs accounting for 30% of total NPLs, which is relatively low [2]. - As of 2024, the NPL ratios are projected to be 1.35% for corporate loans and 1.15% for retail loans, with NPL amounts comprising 65.5% and 34.5% respectively [2]. Group 3: Retail Loan Risks - The risk associated with operating loans in the retail sector is rising, with operating loans expected to account for 46.3% of the overall new retail NPLs in 2024 [3]. - The estimated scale of high-risk operating loans in listed banks is approximately 1.1 trillion yuan, representing 0.6% of the total loan scale projected for 2025 [3]. - The projected total amount of operating loan NPLs for listed banks in 2024 is around 223 billion yuan, which is about one-fifth of the high-risk assets identified in 2021 [3]. Group 4: Stress Testing and Risk Mitigation - Stress tests indicate that under a 20%-50% default rate scenario for high-risk operating loans, the impact on the overall loan NPL ratio for listed banks could range from 0 to 15 basis points [4]. - Local governments are leading the merger and restructuring of city commercial banks to mitigate financial risks, while provincial-level agricultural commercial banks are being restructured to enhance capital strength [4]. Group 5: Investment Recommendations - Following the implementation of "reciprocal tariffs," the banking sector remains a key investment focus, with a continued positive outlook on the stability and sustainability of banks [4]. - Two main investment themes are highlighted: banks with regional advantages and strong certainty, particularly in areas like Jiangsu, Shanghai, and Fujian, and large banks with high dividend yields, including major state-owned banks and select joint-stock banks [4].