AGRICULTURAL BANK OF CHINA(SH:601288) Shang Hai Zheng Quan Bao·2025-12-25 18:50Core Viewpoint - The banking sector is experiencing a valuation recovery, driven by increased dividends and stock price appreciation, despite still being in a state of deep undervaluation [1][2][4]. Group 1: Market Performance - Investors in bank stocks have seen significant gains this year, with some reporting stock values reaching 1.7 million yuan and benefiting from dividends [1]. - The banking sector index (Shenwan) has recorded a year-to-date increase of 6.35%, lagging behind the CSI 300 index by 11 percentage points, indicating a persistent undervaluation [1][2]. - Agricultural Bank of China has led the sector with a remarkable 50.7% increase in stock price this year, while Xiamen Bank also saw a substantial rise of 43.4% [2]. Group 2: Investment Trends - Long-term investors, including insurance funds and state-owned capital, are increasingly viewing bank stocks as a safe investment, contributing to a recovery in the banking sector [4]. - The trend of increasing dividends among banks is seen as a commitment to returning value to investors, with 37 A-share listed banks announcing mid-term dividends totaling 215.46 billion yuan [5][6]. - The implementation of mid-term dividends by banks, including a first for Industrial Bank, reflects a strategic move to attract stable long-term investments [6]. Group 3: Future Outlook - Analysts maintain an optimistic outlook for 2026, predicting a shift in the investment logic for bank stocks from merely defensive dividends to a combination of dividends and growth [7]. - The banking sector is expected to stabilize in terms of performance, with net interest margins projected to bottom out and begin to recover, contrasting with previous years of decline [7][8]. - The capital strength of major state-owned banks is being reinforced through new rounds of funding, enhancing their ability to support the real economy and manage risks effectively [8].