Changjiang Securities·2026-01-05 12:14Investment Rating - The report indicates a positive outlook for the banking sector, recommending long-term investments in leading city commercial banks with clear ROE advantages and large banks with low valuations and high dividend yields [2][10]. Core Insights - The banking sector experienced a slight increase at the end of the year, outperforming the CSI 300 and ChiNext indices, driven by risk appetite and institutional allocation behavior [2][10]. - The introduction of interest-bearing digital RMB is expected to enhance the promotional drive for commercial banks and attract more users [8][42]. - The banking sector is undergoing a rebalancing of its operational cycle and investment value, with a focus on establishing a risk bottom line as a foundation for valuation recovery [6][42]. Summary by Sections Banking Sector Performance - The banking index rose by 1.0% this week, outperforming the CSI 300 and ChiNext indices by 1.6% and 2.2% respectively [10]. - Major banks' H-shares generally increased, with Shanghai Pudong Development Bank leading the gains, while Xiamen Bank saw a pullback [10]. Digital RMB - Digital RMB wallets that have undergone real-name authentication will now earn interest at a rate of 0.05%, transitioning from being treated as cash to being managed like demand deposits [8][42]. - The digital RMB's interest-bearing feature is expected to boost commercial banks' promotional efforts and user attraction [42]. Credit Growth - As of the end of November 2025, credit growth rates varied across regions, with Jiangsu, Zhejiang, Sichuan, and Anhui maintaining growth rates above 8%, and Sichuan leading at 10.4% [37]. - Corporate loans remain the primary growth driver, with Jiangsu and Sichuan showing growth rates of 13.6% and 13.0% respectively [37]. Valuation and Investment Strategy - The report highlights that banking stocks are significantly undervalued from a PB-ROE perspective, particularly quality city commercial banks with leading ROE [7]. - The report recommends focusing on quality city commercial banks such as Hangzhou Bank, Nanjing Bank, and Jiangsu Bank, as well as dividend-focused assets like Bank of Communications and China Merchants Bank [7][10].