Changjiang Securities·2025-05-26 15:36Investment Rating - The report maintains a "Positive" investment rating for the banking sector, particularly favoring high-quality city commercial banks [11]. Core Insights - In the current macroeconomic environment, government leverage expansion is the clearest direction for bank operations, with state-owned banks and city commercial banks focusing on government-related business as a core strategy for balance sheet expansion [2][7]. - Leading city commercial banks are accelerating their market share acquisition, with their performance growth consistently outpacing the banking industry, driven primarily by relatively high-speed balance sheet expansion [6][10]. - The asset quality of city commercial banks, primarily engaged in government-related business, is currently the most stable, with expectations for a decline in the net generation rate of non-performing loans this year [2][9]. Summary by Sections Macroeconomic Environment - The current macroeconomic environment favors government-related business, with city commercial banks focusing on local government, urban construction, and local state-owned enterprises [7]. - The demand for government-led financing continues to expand in key economic regions, such as the Chengdu-Chongqing area and Shandong province, despite concerns about export pressures in the Yangtze River Delta [7][8]. Competitive Landscape - The competitive dynamics between state-owned banks and leading city commercial banks are evolving, with state-owned banks experiencing a significant increase in credit market share due to macro policy guidance [8]. - Regulatory measures are being implemented to protect the net interest margins of state-owned banks, indirectly slowing their loan issuance and creating a more favorable competitive environment for city commercial banks [8][9]. Asset Quality and Loan Performance - City commercial banks have maintained low non-performing loan rates due to their focus on government-related loans, which have seen reduced risk following recent debt restructuring efforts [9]. - The tightening of risk control and loan issuance in retail banking is expected to lead to a slight decrease in the net generation rate of non-performing loans this year [9]. Investment Outlook - The report is optimistic about city commercial banks becoming the core focus for institutional investors in the banking sector, with expectations for their valuations to rise above 1x PB [10]. - Specific banks, such as Hangzhou Bank, are anticipated to lead in valuation increases due to their regional economic strength, asset quality, and performance growth [10].