AGRICULTURAL BANK OF CHINA(SH:601288) Xin Lang Cai Jing·2025-08-21 06:59Core Viewpoint - The rise of Agricultural Bank of China (ABC) in market capitalization reflects a deeper systemic cleanup of corruption within the bank, which has become a significant driver of its stock performance [1][3][5]. Group 1: Market Performance - As of August 20, 2025, ABC's market capitalization reached 22,634 billion yuan, surpassing Industrial and Commercial Bank of China (ICBC) at 20,464 billion yuan [1]. - ABC's stock price increased nearly 33% this year, with a notable rise from around 2.8 yuan in 2023 to over 7 yuan in 2025, indicating a recovery in market confidence [3][6]. - In Q1 2025, ABC reported a net profit of 719.3 billion yuan, marking a 2.2% year-on-year growth, the only major bank to achieve positive growth among the "Big Four" [3]. Group 2: Corruption and Governance - The anti-corruption campaign within ABC began in May 2024, leading to the investigation of several high-ranking officials, which has been perceived as a catalyst for the bank's stock price recovery [3][5]. - By March 2024, ABC had initiated 847 cases and disciplined 789 individuals, including 36 cases of occupational crime, highlighting the scale of the anti-corruption efforts [5][6]. - The investigations have primarily focused on areas such as credit approval and non-performing asset management, revealing previously hidden bad loans and prompting a cleanup of financial practices [6][7]. Group 3: Regulatory Environment - The financial regulatory authorities have intensified scrutiny on ABC, implementing a comprehensive approach to address compliance issues, including significant fines and targeted reforms [6]. - The regulatory focus has shifted from isolated penalties to a more integrated strategy involving multiple lines of oversight, emphasizing compliance in credit, data governance, and agricultural finance [6][7]. Group 4: Market Sentiment - The market's reaction to the anti-corruption measures reflects a broader belief that such governance improvements can lead to a healthier banking environment, thus driving up ABC's stock price [5][7]. - The situation raises questions about the underlying productivity of banks when anti-corruption becomes a primary driver of market value, suggesting a need for a balance between governance and operational efficiency [7].