Changjiang Securities·2026-03-01 10:16Investment Rating - The industry investment rating is "Positive" [12] Core Insights - The report indicates that the banking sector is entering a revenue growth recovery cycle, with expectations for average revenue and profit growth to rebound in 2026 compared to 2025. Most banks are expected to achieve stable positive growth [9][44] - The report highlights the importance of defensive allocation in the banking sector, recommending high-quality city commercial banks such as Hangzhou Bank, Nanjing Bank, and Xiamen Bank, among others. It also suggests focusing on low-valuation, high-dividend banks with improving fundamentals, particularly Industrial Bank [2][6][19] Summary by Sections Market Performance - The banking index fell by 0.9%, underperforming the CSI 300 and ChiNext indices by 2.0% each. H-shares of foreign banks showed an upward trend, while most A-shares declined, with Qingdao Bank leading the decline [6][19] - The average dividend yield for the six major state-owned banks in A-shares is 4.35%, with a spread of 257 basis points over the 10-year government bond yield. The average yield for H-shares has risen to 5.26%, with a discount rate of 17% compared to A-shares [7][31] Revenue and Profit Growth - The report anticipates a recovery in revenue growth for listed banks in Q1 2026, primarily due to a narrowing decline in interest margins and stable bond market conditions. Interest income is expected to show positive growth, although large banks may still experience a slowdown in loan issuance [9][44] - Non-interest income is projected to rebound significantly due to a low base from Q1 2025, when the bond market experienced deep adjustments [9][44] Trading Activity - The trading activity in the banking sector has decreased, with turnover rates and transaction volume showing a slight decline. However, as the sector's valuation has adjusted, attention is expected to increase in the future [8][39] - The report notes that the net outflow of funds from banking-related index funds was 600 million yuan, indicating a potential shift in short-term investment styles [22]