LPR对称下调，强化政策效力

Investment Rating - The report maintains an "Overweight" rating for the banking sector [1] Core Insights - The recent 25 basis points reduction in both the 1-year and 5-year Loan Prime Rate (LPR) is expected to have a neutral overall impact on banks' net interest margins, while supporting the real economy and maintaining stable operations [1] - The combination of interest rate cuts and other monetary policies is anticipated to alleviate concerns regarding asset quality in the short term and strengthen the fundamental operating capabilities of banks in the medium to long term [1] - The report highlights specific banks that may benefit from these changes, including regional banks with strong fundamentals and undervalued shares [1] Summary by Sections Interest Rate Adjustments - The People's Bank of China announced a symmetrical reduction in the LPR on October 21, with the 1-year LPR now at 3.1% and the 5-year LPR at 3.6% [1] - The recent interest rate cuts are the most significant since 2019, with a projected impact of -1 basis point on net interest margins for 2024 and -11 basis points for 2025 [1][3] Recommendations - Recommended stocks include: - Ningbo Bank (002142 CH) with a "Buy" rating and a target price of 26.29 [7] - Hangzhou Bank (600926 CH) with an "Overweight" rating and a target price of 15.87 [7] - Chengdu Bank (601838 CH) with a "Buy" rating and a target price of 19.49 [7] - Nanjing Bank (601009 CH) with a "Buy" rating and a target price of 12.94 [7] - Chongqing Rural Commercial Bank (3618 HK) with a "Buy" rating and a target price of 5.28 [7] - China Merchants Bank (600036 CH) with a "Buy" rating and a target price of 40.61 [7] - Industrial Bank (601166 CH) with a "Buy" rating and a target price of 22.06 [7] Market Conditions - The report notes that the banking sector's valuation and positioning remain at relatively low levels since 2010, indicating potential for recovery in the valuations of quality regional banks and those previously affected by negative asset quality expectations [1]