AGRICULTURAL BANK OF CHINA(SH:601288) Di Yi Cai Jing·2025-09-03 04:16Core Viewpoint - The banking sector is experiencing a recovery with reduced downward pressure on profitability compared to the same period last year, although challenges remain in net interest margin and risks in personal loans and real estate [1] Group 1: Changes in the Banking Sector - The current banking stocks are considered more reliable than a decade ago, primarily due to the resolution of uncertainties in the real estate sector [2] - The banking system has shown resilience against real estate shocks over the past five years, indicating a healthier financial environment [2] - Improvements in the credit system over the past decade have contributed to lower bad debt rates for banks [3] Group 2: Market Dynamics and Investment Trends - The recent rally in banking stocks is attributed to the accumulation of trading chips by institutional investors, with significant participation from insurance funds and public funds [4][5] - The concentration of trading chips towards long-term investors has led to a scarcity of sell-side liquidity, driving prices higher [6] - The current market environment shows a narrowing premium between A-shares and H-shares of banks, prompting institutional investors to shift focus from H-shares to A-shares [7] Group 3: Valuation and Future Outlook - The valuation of banking stocks should be assessed based on price-to-book (PB) ratios rather than short-term price fluctuations, with a reasonable PB range of 1 to 1.5 for high-quality domestic banks [8] - The primary drivers of the banking sector's performance this year are not solely high dividend yields, as other sectors have outperformed banking stocks [8] - The negative impact factors for banks over the next five years are expected to be significantly lower than in the past, particularly concerning real estate and trade conflicts [8]