Yin He Zheng Quan·2025-09-22 06:14Investment Rating - The report maintains a "Recommended" rating for the banking sector [1][39]. Core Insights - The banking sector underperformed the market, with a decline of 4.21% compared to a 0.44% drop in the CSI 300 index. State-owned banks, joint-stock banks, city commercial banks, and rural commercial banks saw declines of 4.43%, 4.48%, 3.61%, and 3.54% respectively [3][13]. - The People's Bank of China (PBOC) adjusted the 14-day reverse repurchase operation to a fixed quantity and interest rate bidding, enhancing liquidity management and emphasizing the 7-day OMO rate as the core policy rate. This change is expected to benefit larger state-owned banks more than smaller banks [3][5][6]. - A new set of policies aimed at boosting consumption has been introduced, focusing on enhancing service consumption platforms, improving service quality, and increasing financial support for consumption-related sectors. This is expected to stimulate retail credit growth [11][12]. Summary by Sections Latest Research Insights - The PBOC's adjustment of the 14-day reverse repurchase operation aims to optimize liquidity management and reinforce the 7-day OMO policy rate [5][6]. Weekly Market Performance - The banking sector's performance was notably weaker than the broader market, with significant declines across various types of banks [3][13]. Valuation of the Sector and Listed Companies - As of September 19, 2025, the banking sector's price-to-book (PB) ratio stands at 0.67, indicating a 37.43% discount compared to the overall A-share market [29][35]. Investment Recommendations - The report suggests that the adjustments in reverse repurchase operations and the new consumption policies will lead to improved fundamentals for banks, with a potential turning point in mid-term performance. Specific banks recommended for investment include Industrial and Commercial Bank of China, Agricultural Bank of China, Postal Savings Bank of China, Jiangsu Bank, Hangzhou Bank, and China Merchants Bank [39][40].