GOLDEN SUN SECURITIES·2025-05-11 10:23Investment Rating - The report maintains an "Increase" rating for the banking sector [5] Core Insights - The report highlights that by the end of 2024, the bond investments of 42 listed banks significantly contributed to their performance, particularly due to the continuous decline in bond market interest rates, with a cumulative drop of 88 basis points in the 10-year government bond yield [1] - The report emphasizes the substantial floating profits accumulated in the FV-OCI financial assets due to fair value changes, which banks have utilized to support their performance through timely disposals of financial assets [1][4] - The report identifies that the floating profits from FV-OCI assets are particularly significant for certain city commercial banks and rural commercial banks, with some banks showing floating profit to profit ratios exceeding 100% [2][3] Summary by Sections 1. FV-OCI Floating Profit Situation - State-owned banks dominate the floating profit scale, with China Construction Bank and Agricultural Bank of China exceeding 50 billion yuan in floating profits by the end of 2024 [1] - City and rural commercial banks show high ratios of FV-OCI floating profits to profits, with Lanzhou Bank reaching 126.9% [2] - The contribution of FV-OCI floating profits to core Tier 1 capital is significant for several city and rural commercial banks, with notable increases year-on-year [3] 2. Financial Asset Disposal Income Situation - In 2024, listed banks disposed of AC financial assets generating a total income of 50.29 billion yuan, an increase of 82.5% year-on-year, and FV-OCI financial assets generating 85.36 billion yuan, an increase of 134.4% year-on-year, leading to a total disposal income of 135.6 billion yuan [4][8] - The report notes that while the disposal income is significant, it does not imply a substantial increase in the scale of asset disposals, as the gains are influenced by the declining interest rates in the bond market [4] 3. Sector Outlook - The report suggests that while short-term impacts from tariff policies may affect exports, long-term domestic policies aimed at stabilizing real estate, promoting consumption, and enhancing social welfare are expected to support economic growth [9] - The banking sector is anticipated to benefit from policy catalysts, with specific banks like Ningbo Bank, Postal Savings Bank, and China Merchants Bank highlighted as potential investment opportunities [9]