GF SECURITIES·2026-02-26 14:05Investment Rating - The industry investment rating is "Buy" [2] Core Viewpoints - The banking industry has shown a recovery in profit growth, with net profit for commercial banks increasing by 2.33% year-on-year in 2025, reflecting a quarter-on-quarter improvement of 2.35 percentage points [13][14] - The overall asset growth of commercial banks continued, with total assets increasing by 9.01% year-on-year as of Q4 2025, while loan growth slightly decreased to 7.26% year-on-year [29][30] - Net interest margin stabilized for two consecutive quarters at 1.42%, with expectations for a gradual recovery in 2026 [54] Summary by Sections Performance - The net profit of commercial banks increased by 2.33% year-on-year in 2025, with state-owned banks, joint-stock banks, city commercial banks, and rural commercial banks showing growth rates of 2.25%, -2.84%, 12.87%, and 4.57% respectively [13][14] - The return on equity (ROE) and return on assets (ROA) for commercial banks were 7.78% and 0.60%, reflecting a year-on-year decline of 0.33 percentage points and 0.03 percentage points respectively [13] Scale - Total assets of commercial banks grew by 9.01% year-on-year as of Q4 2025, with state-owned banks showing a growth rate of 10.78% [29][30] - Loan growth for commercial banks was 7.26% year-on-year, with city commercial banks experiencing a counter-cyclical increase in loan growth [29][30] Interest Margin - The net interest margin for commercial banks was stable at 1.42%, with a year-on-year decline of 10.50 basis points [54] - Expectations for 2026 indicate potential downward pressure on net interest margins in Q1, but a gradual recovery is anticipated thereafter [54] Asset Quality - The non-performing loan ratio for commercial banks was 1.50%, showing a quarter-on-quarter decrease of 2.00 basis points, while the provision coverage ratio was 205.21% [54] Capital - The core Tier 1 capital adequacy ratio for commercial banks was 10.92%, reflecting a quarter-on-quarter increase of 0.05 percentage points [54]